Filed under: Deals, Google (GOOG), Next huge thing, Small business

Founded in 2002 - during the dark times of the World wide web - Friendster became one of the pioneers of the social networking space. The company swiftly got traction and even attracted the interest of Google (NASDAQ: GOOG). But, of course, MySpace and Facebook had ultimately beat out Friendster.

Yet, the plucky website hasn’t given up. In fact, the company has announced a $20 million round of venture capital. The investors include heavyweights like IDG Ventures, Kleiner Perkins Caufield & Byers, Benchmark Capital, DAG Ventures and Founders Fund. In all, Friendster has raised $50 million.

Actually, Friendster is ranked as the 9th most trafficked site in the world, with a heavy penetration in Asia where it is the #1 social networking platform. There are about 75 million registered users.

Interestingly enough, Friendster has a broad portfolio of patents, which perhaps can be used as leverage when combating its rivals. What’s more, the company has done quite well in terms of adding features and providing a good user experience.

To help keep things on the right track, Friendster has hired Richard Kimber as its CEO. He was formerly a regional managing director of South Asia for Google. Apparently, he’ll be spending much of his time in Asia, trying to put together partnerships.

While social networking seems to be maturing in the U.S., there still are great opportunities in foreign markets. Furthermore, with $20 million more in the bank, Friendster can broaden its footprint and perhaps be a hot property for an acquisition.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Deals, Good news

With most observers predicting that it was headed for liquidation, bankrupt discount clothier Steve & Barry’s has found a buyer, according to The Wall Street Journal (subscription required).

The company has concurred to be acquired by turnaround firm Bay Harbour Management for $163, with Bay Harbour planning to operate the company as a going concern, contingent upon the ability to renegotiate leases with malls that home the company’s stores.

But it’s a little more complicated than that. Bay Harbour is the stalking horse bidder, which means that, assuming the deal secures bankruptcy court approval, the $163 million offer will serve as opening bid for an auction of the company’s assets. If no one else steps forward with a high offer — or one that is somehow superior — Bay Harbour will have its prize.

This is obviously fantastic news for the company’s employees, suppliers and other affiliates, but in a larger sense, it’s wonderful for the young people who rely on its 276 store for reasonably fashionable and fabulously inexpensive clothing — like NBA-star endorsed basketball shoes for under $10!

I’ve followed the sage of this company’s demise closely, hoping that it would pull through because of all the money it saves college students. While there’s still plenty that could go wrong, it’s looking more likely that Steve & Barry’s will pull through than it has in more than a month.

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Filed under: Deals, Private equity

With its plans to become a public company in Q4, the folks at KKR have a lot on their plate. However, the company realizes it needs to keep bolstering the firm.

In light of the credit crunch and slowing economy, this is a tough thing. After all, much of KKR’s business comes from its buyout business, which has been mostly frozen for the past year.

But, KKR understands that private equity is a long-term proposition, and there are certainly some great investment opportunities. One attractive area is infrastructure. In fact, in Might KKR announced plans to raise a $10 billion infrastructure fund and retained a top Lazard (NYSE: LAZ) executive, George Bilicic, to manage things.

Well, this week there was more activity on this initiative. KKR retained John Bryson as a Senior Advisor. No doubt, he’s a maestro about infrastructure. He was formerly the CEO of Edison International (he joined the firm in 1984) where he had to deal with complex regulations as well as find ways to grow operations. Before this, he was a partner at the law firm, Morrison & Foerster and even served as the president of the California Public Utilities Commission.

Of course, KKR is facing lots of competition in the infrastructure category, such as from other tier-1 private equity operators and even sovereign wealth funds. Take a look at TPG, which has recently made a preliminary $6.5 billion bid for Australia’s Asciano (a port and rails firm).

Yet, infrastructure is a big space with room for many players. More importantly, private equity firms are bulging with cash and need to find places to put it.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Bristol-Myers Squibb (BMY), ImClone Systems (IMCL)

Bristol-Myers Squibb (NYSE: BMY) has made a $60 a share offer for the part of ImClone (NASDAQ: IMCL) that it does not already own. ImClone chairman Carl Icahn does not think tha$60 is high enough, despite ImClone trading below $40 in June. The offer seems like a pretty good deal, and since BMY owns 17% of ImClone , there’s not likely to be another bidder.

According to The Wall Street Journal, ImClone’s board appointed a committee to review last week’s $60-a-share offer, but the biotechnology company said the board’s “preliminary view is that offer substantially undervalues ImClone.”

Icahn should take the money and run. Bristol-Myers clearly has the option to withdraw its bid and watch the stock drop back to $45. Holders of ImClone stock would likely get POed at Icahn, and is it any wonder?

It isn’t a perfect match, but the ImClone negotiations are starting to shape up the way Microsoft’s (NASDAQ: MSFT) speaks with Yahoo! (NASDAQ: YHOO) did. Microsoft needed Yahoo! for its internet strategy. No other company was going to pay a big premium for the portal’s shares. When Microsoft walked away, Yahoo!’s share lost a third of their value.

Icahn has a history of pushing for a superior deal. His batting average on recent investments is hardly perfect. He’s not doing anyone, including himself, any favors by fighting with Bristol-Myers.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Before the bell, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Yahoo! (YHOO), Apple Inc (AAPL), Cisco Systems (CSCO), Starbucks (SBUX), Market matters, Archer-Daniels-Midland (ADM), Federal Natl Mtge (FNM), Procter and Gamble (PG), Amer Intl Group (AIG), News Corp’B’ (NWS), Alcatel-LucentADS (ALU), Analyst initiations, Economic data, Liz Claiborne (LIZ)

U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude falling below $120 a barrel on demand concerns due to the economic slowdown in the U.S. Commodities in general have been declining. Also today, the Federal Reserve will announce its decision regarding interest rates and it is widely expected they will remain unchanged. Similarly, the Fed’s outlook statement about outlook and focus may also remain largely the same according to expectations. Meanwhile, overseas, both the ECB and BoE are expected to leave rates unchanged.

One of Yahoo! Inc. (NASDAQ: YHOO)’s largest shareholders, Capital Research Global Investors, had asked to review the vote in last week’s re-election of the World wide web giant’s board. Specifically, I guess, it was surprising the vote showed strong support — 85% — for CEO Jerry Yang. There’s no sense dancing around this issue; basically the shareholder implies suspicions of wrongdoings (or really really incompetent tallying of votes).

Bloomberg reports that analysts now anticipate Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record. The the biggest U.S. mortgage-finance companies report tomorrow and according to estimates will show a loss of 74 cents and 60 cents per share respectively. The losses might be greater than expected as we’ve seen before analysts underestimating the credit losses. It won’t be pretty.

Reporting today:
Molson Coors (NYSE: TAP) is scheduled to report earnings before the opening bell with analysts anticipating $1.16 earnings per share, according to First Call. However, Procter & Gamble (NYSE: PG) and Archer Daniels Midland (NYSE: ADM) have already reported. Procter beat per share earnings estimates by 2 cents, managing better results than rival Unilever, which had recently also reported earnings. PG’s net jumped 33%. However, ADM’s fourth quarter profit plunged 61% and per share results came below estimates (excluding items) at 58 cents per share vs. estimates of 67 cents per share.

After the close, Cisco Systems (NASDAQ: CSCO) is due to report and analysts expect earnings of 39 cents per share. Rupert Murdoch’s News Corp. (NYSE: NWS) will also report then and analysts expect earnings of 34 cents per share.

Meanwhile, Alcatel-Lucent (NYSE: ALU), which has recently announced the long overdue scheduled departure of CEO Russo and Chairman Tchuruk, has kicked off a global hunt for new leadership this week. The Wall Street Journal said that one exec had already turned the company down, former BT Group PLC boss Ben Verwaayen. While Qualcomm’s Jha seems to be happy for the chance to go to struggling Motorola, at least the company has a plan in place. Troubled Alcatel, though, might find it more difficult to attract good talent.

According to Ars Technica, Apple Inc. (NASDAQ: AAPL)’s CEO Steve Jobs admitted in an internal e-mail sent to employees Monday that MobileMe was launched too early and “not up to Apple’s standards.” “It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store,” he states. Considering all the complaints, no doubt many would agree with him.

Also, Fourbucks, I mean, Starbucks (NASDAQ: SBUX) stated it will now offer its morning customers any iced grande beverage for $2 after 2 p.m. This is the coffee chain’s attempt to boost afternoon traffic.

Noted analyst calls this morning:
UBS upgraded AIG (NYSE: AIG) from Neutral to Buy.
Credit Suisse downgraded Liz Claiborne (NYSE: LIZ) from Outperform to Neutral.
UBS initiated Apple (NASDAQ: AAPL) with Buy and $195 target price.

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