EUniverse Chief Holds Hope for L90 Deal
by Christopher Keough
Euniverse Inc. Chairman and Chief Executive Brad Greenspan said he isn't walking away from L90 Inc., even as he watches eUniverse shares take a beating as a result of its deal to acquire a business under SEC investigation.
"We would like to consummate a deal with L90," Greenspan said last week, after L90 officials announced Feb. 4 that the Securities and Exchange Commission had issued subpoenas to the company and one of its directors.
Greenspan said he was hopeful the investigation would conclude that L90's financial records are in order. But immediately after the subpoenas were announced, eUniverse said in a release it would put the deal on hold until "it is determined that there is no undue risk of adverse consequences to eUniverse or its shareholders."
The deal, valued at $54.8 million, would have seen L90 shareholders paid between $2 and $2.20 per share in cash for their holdings.
L90 shares fell sharply on the news, from $2.05 on Feb. 1 to $1.40 the day of the announcement. eUniverse, an entertainment portal, also took a hit, closing at $5.58 on Feb. 5, down from $6.67 in Feb. 1 and off its 52-week high of $8.26 on Jan. 24.
Officials at L90, an Internet advertising company, did not return calls for comment.
Greenspan said Enron-induced skittishness over questions about accounting methods is driving down eUniverse stock. But he promised he wouldn't be taking on any businesses arriving in Trojan horses. "We are going to wait and see what the SEC investigation yields," Greenspan said. "We are not going to move forward until we're satisfied with more disclosure."
Meantime, eUniverse will actively pursue other acquisitions, potentially replacing the L90 transaction. "We have a pretty big pipeline on the M & A; side," Greenspan said.
Luxtera Inc., a Pasadena start-up developing photonic technologies for application in telecommunications markets is out of the chute with $7 million in first-round venture funding.
The company, which has its roots in the labs of both UCLA and Caltech, raised the money from big venture capital players Sevin Rosen Funds, ITU Ventures and August Capital.
The business aims to commercialize nanophotonics technology optical structures an order of magnitude smaller than those traditionally used in integrated optical devices developed at Caltech and UCLA.
John Oxaal, venture partner at Sevin Rosen, said Luxtera will be led by Alex Dickinson, a former Bell Labs executive, Eli Yablonovitch, who invented the photonic crystal at UCLA, and Caltech physics professor Axel Scherer, who has used photonic crystals to make some of the smallest ever lasers.
Oxaal said Luxtera's products, which won't hit the market for another two years, will be used in telecommunications equipment. He declined to identify the product, but an advertisement recruiting a photonic design engineer for the company identifies the product as a semiconductor.
Oxaal said Sevin Rosen and August Capital each invested $3.2 million and ITU Ventures put in $500,000.
Upon forming Luxtera, company officials folded in Simulant Inc., a software developer started by Scherer and some students at Caltech. That business was started with $400,000 in seed funding from ITU Ventures.
Simulant built a program that ties together PCs to solve a complex computing issue. By assigning each PC a part of the problem, the software approximates the computing power of a supercomputer at a fraction of the cost.
Key Company for Sprint
L.A. software company Zkey recently finalized a "better-than-seven-figure" deal with Sprint PCS to provide the wireless telecommunications company with technology to better and more easily manage customer profiles.
President and Chief Executive Kristin Johnson said the software provides a method for users to authorize who gets their personal information with the punch of a button on a PCS device. The information allows users to tailor their wireless services as well as delivering personal data to advertisers.
User files are stored on a Sprint PCS server from the moment of registration for the service and can be updated by phone or the Internet.
Johnson wouldn't reveal the value of the two-year deal, only confirming that it was worth more than $1 million.
Zkey was founded in 1999 as an Internet portal supporting the exchange of the same profile information. The company, which has raised $22.6 million in three rounds of venture capital funding, changed to production of licensed software in 2001.
Zkey's technology will be used during the Winter Games in Salt Lake City to store event results for controlled media access. In keeping with her close-to-the-vest style, Johnson said that deal was valued at "more than six figures."
Staff reporter Christopher Keough can be reached at (323) 549-5225, ext. 235, or at firstname.lastname@example.org.
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