The Nasdaq might be sagging and venture capitalists might be growing wary of throwing money at tech companies, but big investment deals are still happening in L.A.
InternetConnect, which offers broadband technologies that help small and medium-sized businesses to connect and complete transactions with their business partners and others, announced last week that it has completed a $52.6 million round of funding.
The Marina del Rey-based company’s latest investment came in part from Efficient Networks, Winstar Communications, Polycom and Cabletron Systems along with local venture firm Idealab Capital Partners. Two previous investors venture capital firms Crosspoint Venture Partners and Spectrum Equity Investors also participated in this round.
As for how it was able to land such significant funding amid recent market fluctuations, the company attributed its success to its relationships and products.
“We are excited about the ongoing relationship with our venture partners and we welcome the participation by our new corporate investors,” said Cliff Young, founder, president and chairman of InternetConnect. “Obviously, it is extremely gratifying to build a company and develop products that are so positively received.”
With the recent round of funding, the company has now raised a total of $81 million. InternetConnect plans to use the funding to expand its nationwide network, bolster its marketing and branding campaign, and for other general corporate purposes.
Plans Put on Hold
Yet another local company has postponed its initial public offering, but it’s not a dot-com startup that had been hoping to capitalize on the market’s faded infatuation with Internet stocks.
Software Technologies Corp. in Monrovia, founded in 1989, provides data exchange, systems integration and networking technologies for clients, including Amgen Inc. and the L.A. County government.
After many years of operating as a private company, Software Technologies (or STC) filed to sell 6.1 million shares, expected to be priced between $16 and $18 apiece, with hopes of raising funds that would allow the company to significantly expand. The offering was delayed late last month.
The timing of Software Technologies’ decision to postpone, the day before pricing was scheduled, speaks volumes. After investment bankers get feedback on a company that plans to go public, they price the deal and trading begins shortly thereafter.
“STC is waiting for optimal (market) conditions,” said an STC spokeswoman. “It’s been around for 10 years, and it’s not just like a startup racing to get out right now. STC can afford to wait.”
News reports on the market’s lack of enthusiasm for tech issues have focused on business-to-consumer e-commerce and content sites, but Software Technologies has nothing to do with those niches. In fact, it is only tangentially involved with the Internet at all.
Still, its situation did not come as a surprise to at least one analyst.
“Not only has this tough period hit B-to-C companies, it’s hit everyone,” said Rob Healy, principal at venture capital firm William E. Simon & Sons. “The market is tough right now, there’s a lot of deals being delayed.”
Healy is not familiar with Software Technologies, but said many other companies have postponed IP’s. “If they were near pricing, that shows they were very close, but for some reason, they must not have liked the pricing,” he said.
High Hopes
DirecTV, the satellite television provider and subsidiary of Hughes Electronics Corp., is predicting booming growth under its recently appointed president.
Odie C. Donald is taking over the position which had been vacant since former President Eddy W. Hartenstein was named the company’s global chairman earlier this year.
Donald, who spent 25 years in executive positions at BellSouth, outlined in a conference call with journalists last week his three initial priorities: He wants to expand DirecTV’s customer base, ensure that the company continues to rival cable with its comprehensive, 24/7 customer service, and focus on improving the company’s cash flow and profitability.
The company expects that earnings before interest, taxes, depreciation and amortization (EBITDA), a measurement frequently used to assess the success of media companies, will reach between $300 million and $400 million this year, up from $150 million last year.
A recently released report issued by Hughes showed that DirecTV generated revenues of $1.06 billion in the first quarter ended March 31, up from $474 million in the first quarter last year.
“I look forward to leading the battle against cable,” Donald said. “I feel that while DirecTV has been experiencing record growth, I still see tremendous opportunities to continue the strong growth and I don’t see any limitations to our growth.”
Site of the Week
Drivers who compulsively hunt for faster commutes, workers late for a meeting across town, and practically any other motorist could easily become obsessed with Trafficstation.com, a site offering constantly updated traffic accident, construction and congestion information.
With a click on ‘Los Angeles,’ users can look at a map showing which L.A. highways are under construction. Accidents, marked with a red triangle, are also marked with numbers to signal their significance, so users can tell whether an accident is a fender-bender or a big-time pileup.
Maps for about 20 other cities are also listed on TrafficStation.com, meaning users in L.A. can marvel at how many bridges and tunnels in New York City are under construction.
The truly traffic-jam-phobic can even sign up for the company’s TeleWarning service, which alerts phones, pagers, e-mail or even wireless devices with Internet access of any traffic incidents that could affect a selected route.
In addition to offering its services to the masses through its Web site, TrafficStation.com also provides updated information to other businesses for use on their Web sites. Clients include Microsoft Corp.’s Expedia travel service.
