Cha2, interesting article relating to MSFT and SFE. I thought this might interest you:
Microsoft exec goes to 'CMGI Jr.'
By Lawrence Aragon
Redherring.com
July 23, 1999
Microsoft (Nasdaq: MSFT) wunderkind
Sam Jadallah has landed right smack dab in
the middle of what's expected to be another
hot Internet IPO.
Mr. Jadallah, 35, this week
became a managing
director for Internet Capital
Group (ICG). He
announced his departure
from Microsoft on July 8.
ICG is an Internet holding
company similar to CMGI
(Nasdaq: CMGI), but its focus is purely on
business-to-business Net ventures.
Some analysts have
taken to calling ICG
"CMGI Jr." Based on
CMGI's success,
market watchers
expect ICG to pop
when it goes out next
week.
ICG has registered to
sell 13 million shares
for $10 to $12. With
124 million shares
outstanding after the
offering, ICG would have a market cap of
$1.5 billion, placing it among the biggest Net
IPOs this year.
Merrill Lynch (NYSE: MER) is the lead
among five investment banks underwriting
the deal.
TOO GOOD TO PASS UP
Mr. Jadallah declined to comment on his
new position, noting that ICG is in its quiet
period.
In an interview on July 8, the day after he
announced he would leave Microsoft, Mr.
Jadallah told Redherring.com that he
routinely turned down job offers until he got
a call from ICG (which he did not name at
the time of the interview).
"Every day some kind of offer has been
coming to me," he said at the time. "Finally
the right thing came together. This
opportunity is something I've been toying
with for a little while."
Formerly vice president of worldwide
enterprise sales for Microsoft, Mr. Jadallah
left the company after 12 years.
A source close to Mr. Jadallah says ICG
hired him to help entrepreneurs grow the
companies in its portfolio. He'll remain in
the Seattle area, working with service and
e-service companies in the Northwest, the
source says.
Analysts say Mr. Jadallah picked a winner.
"This is going to be a really hot story," says
Ullas Naik, senior vice president of research
for First Albany (Nasdaq: FACT). "To
some extent, the lure of the
business-to-consumer companies has faded
a bit, unless they're highly differentiated."
TO B2B OR NOT
Mr. Naik, who follows CMGI, adds that
investors have seen a slew of
business-to-consumer companies go public
this year, but very few business-to-business
ventures.
"Internet Capital is a pretty interesting and
diversified way to play the B2B boom," Mr.
Naik says.
ICG, founded in 1996 by two former
*Safeguard Scientifics (NYSE: SFE)
executives*, already has a track record. It
had a stake in VerticalNet (Nasdaq: VERT),
which went public in February for $16 a
share and closed at $47.94, up 199 percent,
on its first day. The stock closed at $96.25
Thursday.
ICG also has a stake in Deja.com, an online
discussion clearinghouse, which registered
to go public last month. It hopes to raise
$57.5 million.
All told, ICG has investments in more than
30 Net companies, including Arbinet Global
Clearing Network, Bid.com, Breakaway
Solutions, ComputerJobs.com, and
PrivaSeek.
THE MONEY TRAIL
ICG has an impressive roster of backers
itself, including Comcast (Nasdaq:
CMCSA), its largest shareholder, with 10.6
million shares; Compaq Computer (NYSE:
CPQ)'s CPQ Holdings, which has 5 million
shares; and Safeguard Scientifics, with 21
million shares.
None of this means that ICG will be a slam
dunk. It has to compete with lots of VCs
for stakes in hot B2B startups. It will also
compete with CMGI, says Phil Leigh,
Internet analyst for Raymond James (NYSE:
RJF).
"It's a mistake to say that CMGI is only
business-to-consumer," he says. "It's deep
in many aspects of the Internet, including
business-to-business."
Still, Mr. Leigh expects ICG's IPO to be
"well received," particularly because of its
ties to Safeguard and the fact that it has one
successful IPO under its belt.
As for the heady valuation, Mr. Leigh points
investors to MP3.com (Nasdaq: MPPP),
which went public Tuesday. "If someone
can justify a $4 billion market cap for MP3,
I think you can certainly rationalize $1.5
billion for Internet Capital, based on the
performance record of the people behind
it."
I am curious to your thoughts on this,
Teflon
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