VC Ratings

Martha Stewart back in the saddle solo

2009-04-21T15:53:00Z

Martha Stewart will go back to running her company solo, as Wenda Harris Millard steps down as co-CEO of Martha Stewart Living Omnimedia, Inc. (NYSE:MSO). The move is part of a reorganization the company announced Tuesday morning.

Millard is joining Michael Kassan's media representation firm Media Link LLC as president.

Millard joined Martha Stewart Living Omnimedia in 2007 as president of media (a title she retained), after spending six years as chief sales officer at Yahoo! Inc. (NASDAQ:YHOO). Millard took over the co-CEO role when Susan Lyne stepped down as CEO last summer. Lyne ran the company while Stewart was in jail for insider trading and is credited with turning the company around and making it profitable.

"At the end of the day, it is Martha's company, and she needs to direct where it goes next," Lyne told The Deal last year when we asked about her decision to leave the company and join Gilt Groupe, a fast-growing e-commerce startup funded by Kevin Ryan and Dwight Merriman, former executives of DoubleClick Inc., the online ad pioneer that was ultimately acquired by Google Inc. (NASDAQ:GOOG) for $3.1 billion last year.

Millard's roots also go back to DoubleClick, where she was a founding executive in the dot-com era. In The Deal's Decade of The Deal video series, Millard recently shared her memories of that era's infamous merger of American Online Inc. and Time Warner Inc. (NYSE:TWX). You can watch the video below.

You can also watch our Behind the Money video interviews with Kevin Ryan here and Dwight Merriman here. Pipeline subscribers may read The Deal's full Q&A with Susan Lyne here. - Mary Kathleen Flynn

Yahoo! earnings preview

2009-04-20T22:00:00Z

Yahoo! Inc. (NASDAQ:YHOO) will deliver mixed first-quarter results when it announces earnings after the stock market closes Tuesday, with "improvements in search offset by a decline in display," predicts Jefferies & Co. analyst Youssef Squali in a research note Monday.

Jefferies' buy rating is "buoyed by the new CEO's sense to urgency to maximize shareholder value."

Yahoo! CEO Carol Bartz and Microsoft Corp. (NASDAQ:MSFT) CEO Steve Ballmer have been talking about a potential partnership that involves Yahoo!'s outsourcing search to Microsoft in return for serving display ads on its properties. Last week, Squali said such a deal could save the search engine maker $1 billion and more.

Reporters hope Bartz (pictured) will provide an update on the talks with Microsoft, but if she follows her own rules, she'll be mum on the topic. Bartz has said she told Ballmer, "I am not going to negotiate with my 55,000 favorite friends," referring to Microsoft's employees.

Analysts surveyed by The Associated Press expect Yahoo!'s net revenue to drop by about 10% in the first quarter.

Yahoo!'s earnings will follow last week's results from Google Inc. (NASDAQ:GOOG), which were better than expected but showed the search leader's slowest growth since the company went public in 2004. - Mary Kathleen Flynn

August Capital: Big deals for big fund

2009-04-20T18:16:00Z

Helping StumbleUpon's founders buy back the startup from eBay Inc. (NASDAQ:EBAY) offers a hint of the innovative deals we can expect to see from August Capital Management LLC's new $650 million balanced-stage fund.

Partner David Hornik (pictured) tells The Deal that the firm has ambitious plans for the fund, which beat the firm's 2005 fund by $100 million and was the biggest venture capital fund raised in an otherwise rather disappointing first quarter.

"We can invest as much as $300 million in a single investment," Hornik says, explaining that last week's StumbleUpon deal offers a small taste of bigger things to come. In that deal, founders Garrett Camp and Geoff Smith and investors including August Capital bought the recommendation engine back from eBay, which had acquired it two years ago for $75 million.

"I've been excited about StumpleUpon for several years now and tried to fund it before it was bought by eBay," says Hornik. "I was disappointed to see it sell to eBay, and the opportunity to spin it back out of eBay under terms that I think will be advantageous to investors struck me as a no brainer."

August Capital has a tradition of using economic downturns to its advantage.

"We were part of the syndicate that took Seagate private, and that was an interesting opportunity that existed only as a result of that point in time in 2000," says Hornik. "I think we look forward to seeing other opportunities like that. StumbleUpon is a smaller version of that and a great example of what's advantageous about investing in this time."

August Capital boasts one of the longest and winningest track records in the VC business. It was co-founded in 1995 by John Johnston and David Marquardt. The latter's previous firm, Technology Venture Investors, or TVI, was the sole investor in Microsoft Corp. (NASDAQ:MSFT), and Marquardt has been on the software giant's board of directors since 1981. Today, August Capital has six partners who manage $1.3 billion.

Click here for more of The Deal's Q&A with August Capital's David Hornik. - Mary Kathleen Flynn

Venture capital not recession-proof

2009-04-18T21:29:00Z

Saturday's news that venture capital investments plunged in the first quarter to a level not seen since 1997 should erase any notion that the VC busniess is somehow recession-resistant. The latest report adds insult to injury, as earlier in the week the National Venture Capital Association, or NVCA, reported that fewer VC funds were raised in the first quarter than in any comparable period in more than five years. More bad news to the tech sector came Friday when California's Employment Development Department said that Silicon Valley's unemployment rate jumped to a record 11 % in March, the highest since the state tracked data for the region in 1990.

Venture capitalists invested just $3 billion in 549 deals in Q1, according to the MoneyTree Report from PricewaterhouseCoopers and the NVCA, based on data from Thomson Reuters. Quarterly investment activity was down 47 % in dollars and 37 % in deals from the fourth quarter of 2008, when $5.7 billion was invested in 866 deals. The quarter, which saw double digit declines in every major industry sector -- even clean tech -- marks the lowest venture investment level since 1997.

The clean tech sector, which includes alternative energy, pollution and recycling, power supplies and conservation, saw an 84 % decline in the dollar level from the fourth quarter of 2008 when $971 million went into 67 deals, making it the lowest investment level since 2005.

Seed- and early- stage investing was also hit hard, falling 45 % in terms of dollars and 40 % in terms of deals in the first quarter compared with the previous quarter.

Update: Union Square Ventures co-founder Fred Wilson provides evidence that suggests Silicon Valley is bearing the lion's share of the recession's damage to venture capital. "The total amount raised in Silicon Valley which was running between $8bn and $10bn per year dropped to an annualized rate of less than $5bn, a 50% reduction," blogs Wilson on Sunday. "At the same time, the total amount raised in New England, which was running between $3bn and $4bn, dropped to an annualized rate of below $2bn, a drop of 1/3. And in the NY Metro market, we saw a small decline, but nothing to get excited about." -- Mary Kathleen Flynn

Google exec exits continue

2009-04-17T21:08:00Z

Google Inc. (NASDAQ:GOOG) announced on its cautious-looking forward but better-than-expected earnings call Thursday that 10-year veteran Omid Kordestani (employee No. 12) is handing over management of the company's global sales and partnership operations to Nikesh Arora, currently president of international operations, and is stepping into a new role as senior adviser to CEO Eric Schmidt and founders Larry Page and Sergey Brin.

"While [Kordestani] hasn't exactly left for good, his decision to step down follows the departure of several other high-profile executives in Google's sales organization -- signaling even more strongly that the bloom is finally coming off the rose," points out tech blog VentureBeat.

"It's arguable that the trend started last spring with Sheryl Sandberg, Google's vice president of global online sales and operations, leaving for the chief operating officer post at Facebook -- but that seems like a stretch," says VentureBeat. "What's more convincing is the triple-bail of U.S. sales head Tim Armstrong, Latin America sales chief Gonzalo Alonso, and Asia-Pacific and Latin America operations president Sukhinder Singh Cassidy in the past two months. Sure, they left for coveted opportunities at AOL LLC (coveted is a relative term), Globant and Accel Partners, respectively. But since when do pampered Google employees opt to rejoin the corporate establishment?"

Add to Michael Adair to the list. He departed Google, where he headed North American sales finance, back in July to become vice president of corporate development and finance at the start-up Glam Media, the online ad network that targets women, and raised a $84.6 million Series D last year. -- Mary Kathleen Flynn

Music services: They live, they die

2009-04-17T18:06:06Z

The music industry "is certifiably dysfunctional," wrote an exasperated Gerd Leonhard last year. Leonhard had just shut down his streaming music service, Sonific, after it became obvious that the fees demanded from the four major record companies were unsustainable. "Doing business under the existing rules of the major labels will simply amount to economic suicide," he concluded. So, along with Sonific's other backers, Gerd, whose day job is to roam the world as a technologist, pulled the plug.

I thought of Leonhard's rant while various music industry reports and announcements came rolling through these past few days. He's right. The industry really is loopy. Venture capital and private equity continue to throw serious money into all sorts of digital music endeavors while previously seeded companies flounder and die with great regularity.

The majors, which often continue to act like a combination of General Custer and Marie Antoinette, must shoulder some of the blame. But part of it reflects a herd mentality among the moneyed. They all seem to be chasing that next big thing out there. Right off the cliff. Investors obviously hope Friedrich Nietzsche was right. So far, however, the only thing to come out of the music industry's current state of chaos is more chaos.

On Wednesday, a music-sharing site for musicians called SoundCloud announced it had raised €2.5 million ($3.3 million). That same day, Macrovision Solutions Corp. said it was paying $16.5 million in cash for Muze Inc., which calls itself a media-preview and discovery service, with an emphasis on music.

A day earlier, a new Internet radio service called Goom Radio announced it had raised $16 million in Series A money from a trio of venture capital firms. Especially young listeners are flocking to streaming music. Yet economic viability is so far completely elusive, as Leonhard and his partners discovered. Even the most popular offerings, like Pandora Radio, are having a tough time surviving.

Meanwhile, add another body to the graveyard. According to reports from Digital Music News, PassAlong Networks is winding down and will attempt to sell various businesses. Good luck. The Nashville-based digital-media company offers online music services, just like dozens of competitors out there.

Founder and CEO Dave Jaworski didn't return phone calls and e-mail requesting further comment. A spokesperson didn't get back, either.

PassAlong had raised $35 million, according to Jaworski, when I interviewed him almost two years back. To keep the company alive, Jaworski was trying to raise an additional $30 million, according to an interview with Venture Nashville Connections late last year. -- Matt Miller

Matt Miller covers distressed investing for The Deal.

Twitterati Eric Schmidt, Ashton Kutcher, Oprah

2009-04-17T17:54:00Z

One week after conflicting rumors that Google Inc. (NASDAQ:GOOG) was or was not trying to buy Twitter Inc. flooded the blogosphere, Google CEO Eric Schmidt discussed the benefits of making a deal with the hot microblogging service during the search giant's better-than-expected but cautious-looking forward-earnings call on Thursday.

Twitter illustrates that "innovation is alive and well" in Silicon Valley, said Schmidt.

"Without commenting specifically about Twitter," continued Schmidt, "you could imagine that ... it could be a channel for product information, marketing information, real-time information for which you can hang advertising products, whether it's a text ad or a video ad or so forth off of it. ... It strikes me that's a logical strategy for them to pursue and something that we would be very happy to pursue with them and all other players in that space."

Venture-backed Twitter has had yet another banner week, thanks to the highly hyped race to become the first entity with 1 million followers, which Ashton Kutcher won against CNN on Thursday. As pledged, to celebrate his victory, Kutcher donated $100,000 to Malaria No More.

Friday appearances by Kutcher and Twitter co-founders on Oprah and CNN's Larry King are due imminently. On Twitter, you can follow Kutcher @aplusk, wife Demi Moore @mrskutcher, CNN @CNNbrk, Oprah Winfrey @oprah and me @MKFlynn. -- Mary Kathleen Flynn

NYSE: Bring on the IPOs

2009-04-17T12:30:00Z

For companies dreaming about going public, this week provided something to get excited about, finally. Two initial public offerings priced, making April the busiest month since August 2008 for stock debuts. Yesterday, language learning software developer Rosetta Stone Inc. (NYSE:RST) shares climbed about 40% to close at $25.12 on their first day of trading after pricing above their range Wednesday. Yesterday, online college Bridgepoint Education Inc. (NYSE:BPI) debuted at $10.50 per share, its IPO price, which fell below its expected $14 to $16 range. But shares ended trading Wednesday at $11.10.

In the other 2008 debuts, Chinese online video game company Changyou.com Ltd. went public earlier this month and infant formula maker Mead Johnson Nutrition Co. went public in February. Both companies priced at the top of their respective ranges.

Three of the four new listings this year are trading on the NYSE (Changyou.com debuted on the Nasdaq), which is giving Scott Cutler (pictured) something to get excited about too. As the exchange's executive vice president in charge of listings in the Americas, Cutler manages relationships with listed companies as well as the NYSE's products, including IPOs. He's also responsible for the exchange's relationship with the Investment Banking, Private Equity, Venture Capital, and Legal Communities.

We spoke with Cutler Thursday, a few hours after Rosetta Stone began trading. -- Olaf de Senerpont Domis

Dealscape: What do the successful debuts of Bridgepoint and Rosetta Stone mean for the IPO window?

Scott Cutler: The window never closed. It is always open to those willing to accept the valuations that are provided. This week's IPOs provide two good data points that lay a foundation for the future. Both companies are in growing markets, both had executed well, and were market leaders in their spaces. Those three conditions are prerequisites for anything that is going to come to market.

It's definitely rarified air -- there aren't hundreds of companies that can meet even two of those three conditions.

In both the transactions this week, there's a shift on the buy side. These companies saw on their road shows many more long-term oriented investors. Many of the hedge funds are gone.

How important is pure sentiment to the IPO market, rather than pure financial performance?

The markets right now are driven on sentiment. It's an emotional market place; there's a herd mentality to it. If these IPOs didn't perform well, it would be very difficult for the next IPO to go out there and say "I will deliver."

From an investor's point of view, the fact that investors have already made money on these deals will generate more desire for this product. It feeds on itself.

How did the dismal 2008 for IPOs affect NYSE?

We don't create the IPO market, we just respond to it and create a platform for it to exist. Last year was actually pretty good. The Visa transaction was a huge success. [Credit card giant Visa Inc. went public in March 2008 in a $17.9 billion IPO, the largest U.S. initial public offering ever]

We've been around for a long time; we're here for the cycle.

Both of this week's deals were in technology, which is generally Nasdaq territory. Why didn't Bridgepoint and Rosetta Stone turn to your rival?

Our last deal before Mead Johnson was Rackspace [Inc., a Web hosting company that went public in August 2008], too. We've raised more in tech proceeds over the last couple years than the Nasdaq, which is a very big shift. It's probably a result of the fact that companies that are launching into the marketplace like the global association they get with the NYSE. They like to communicate that they are meeting the highest listing standards.

(Pipeline subscribers can find more about this week's IPOs here.)

Facebook, Twitter would heat up the IPO market

2009-04-16T19:24:00Z

Perhaps Facebook Inc. will go public -- if only to settle the valuation question. The social networking pioneer's indeterminate worth has come up again on Thursday, amid rumors that Facebook turned down term sheets that value it at $2 billion or $4 billion, depending on which tech blog you read.

Both figures are far below the $15 billion valuation that gets tossed around due to Microsoft Corp. (NASDAQ:MSFT)'s purchase of 1.6% of Facebook for $240 million in 2007.

More realistically, court documents indicate that Facebook values itself at $3.7 billion. The prices being paid in the secondary market for employee shares place the company's worth between $4 billion and $5 billion.

Facebook's murky valuation reared its ugly head recently when BusinessWeek reported that Facebook investor Peter Thiel said it was a factor in the company's inability to snatch up Twitter Inc. for $500 million last year. Twitter co-founders Evan Williams and Biz Stone say they want Twitter to remain independent anyway, a point reiterated by Union Square Ventures co-founder and Twitter investor Fred Wilson in an interview published Thursday by The New York Times' Bits blog.

Speaking of Wilson (pictured), he published a provocative post of his own on Thursday, concluding that with all this speculation about Facebook's financials being bandied about (including reported details, such as it may make $500 million this year and it has $200 million in cash on its balance sheet) combined with the availability of its shares on the secondary market, it may as well be public.

"I suspect that Facebook is seriously considering doing what Google did and biting the bullet and going public," writes Wilson on his popular A VC blog. "The IPO market is coming back (that's my gut). And at this point, there isn't much cost (other than finacial costs of being public) that Facebook isn't already paying."

And speaking of going public, it's a strategy some are recommending for Twitter. Entrepreneur/investor Howard Lindzon has been pushing Twitter to take the plunge for the last month. (Lindzon holds shares in Twitter through his investment in Betaworks, which picked up a stake in Twitter when it sold Summize Inc. to the microblogging service last year.)

Indeed, I can't think of anything that would heat up the IPO market faster than both Facebook and Twitter going public. Talk about sizzle. Make that shizzle, as Lindzon likes to say.

Who knows? Maybe that's what Twitter co-founder Williams was hinting about when he teased his followers that Friday will be "a very big day." Hey, a girl can dream. -- Mary Kathleen Flynn

Pipeline subscribers will find more here on the IPO market, including this week's offerings for Rosettea Stone Inc. and Bridgepont Education Inc.

Follow me on Twitter @MKFlynn.

Macrovision buys Muze

2009-04-15T21:14:22Z

Macrovision Solutions Corp. (NASDAQ:MVSN) has agreed to buy the assets of Muze Inc. for $16.5 million in cash, the digital entertainment company said after the markets closed Wednesday.

Macrovision said the acquisition will help build its offerings of entertainment metadata, which is data that aids and enables users to search for and find the relevant content they are after. Specifically, Muze will help build Macrovision's portfolio of European content metadata.

Muze, a kind of entertainment database creator, was acquired by Enterprise Partners Venture Capital in 2005 for an unspecified amount. Founded in 1990 with angel investment money, Muze was acquired in 1992 by Metromedia Co. owners John W. Kluge and Stuart Subotnick. The company licenses its database and sells custom e-commerce applications to major online retailers and online entertainment companies. Muze acquired digital music company Loudeye Corp.'s U.S. assets for $11 million in 2006.

Macrovision said the transaction will contribute about $15 million and 10 cents to 2010 revenue and adjusted proforma earnings per share, respectively. - Olaf de Senerpont Domis

New York Times passed on Amazon, Google, Yahoo!

2009-04-15T18:26:34Z

The New York Times Co. (NYSE:NYT) entered this decade with over a billion dollars in surplus, but that was before the commercialization of the Internet as a mass media. Today, it seems more than apparent that the Gray Lady squandered its opportunity to spend that money to diversify the newspaper company's revenue stream into the nascent medium.

Mark Bowden, a contributing editor at Vanity Fair, said on WNYC radio on Wednesday that the Times could have used its pot of money:

to acquire Google Inc. (NASDAQ:GOOG), Yahoo! Inc. (NASDAQ:YHOO), or Amazon Inc. (NASDAQ:AMZN) when none of these companies were household names
to pursue an online venture similar to Craigslist
to take advantage of its brand name and invest in cable news similar to CNN to showcase its journalists

Those moves would have certainly put the New York Times in a stronger position than it is in today. Instead, the Times is languishing in debt, relying on declining advertising because it decided to invest in newspapers such as the Boston Globe for $1.1 billion, which reportedly is now worth a fraction of what the company originally paid in 1993. The Times has threatened to close the Globe unless it drastically gets the costs concessions from unions at the Boston paper.

However, had the Times followed Bowden's suggestions, there is no guarantee that Amazon, Google or Yahoo! would have ever become household names under Times stewardship. - Gerald Magpily

See Dealscape: The Times on the Times and The Boston Globe
Listen to interview on WNYC.org

Will buyers come gunning for Skype?

2009-04-15T16:54:03Z

With eBay Inc.'s (NASDAQ:EBAY) announcement Tuesday afternoon that it was cutting loose its Internet calling service Skype, it seemed to quash reports that the unit's original founders were interested in teaming up with private equity firms to buy it back.

The Wall Street Journal Wednesday, citing people familiar with the matter, said the reported $2 billion offer put forth by Niklas Zennstrom and Janus Friis was too low for eBay's taste. Yet some predicted that Skype might still become an acquisition target.

In a research note Wednesday, Merrill Lynch & Co. analyst Justin Post questions the timing of eBay's announcement, and wonders whether it's a way to trot out Skype for potential buyers.

"Announcing a spinoff this far in advance strikes us as unusual unless management believes the possibility of an IPO could drive potential buyers to the table," Post writes. The most likely buyers, he says, would be Google Inc. (NASDAQ:GOOG), Microsoft Corp. (NASDAQ:MSFT) and Cisco Systems Inc. (NASDAQ:CSCO), though an estimated price tag of around $3 billion might be tough to justify for these companies.

EBay plans to spin off Skype via an IPO in the first half of 2010. The online auctioneer paid $2.6 billion for Skype in 2005, but integrating the acquisition has not gone as planned. EBay took a $1.4 billion write-down on Skype in 2007. In a statement Tuesday, eBay chief executive John Donahoe says the unit has "limited synergies" with its parent.

Post and other analysts Wednesday generally agreed with Donahoe and applauded his decision. In a note Wednesday, Bernstein Research analyst Jeffrey Lindsay argues that Skype weighed on eBay's stock price despite the company's core business value, drained management resources and accounted for disproportionate costs that will now be eliminated from its parent's income statement.

"Overall, we believe the asset is more valuable outside the company than inside and eBay will potentially be able to use the money from the IPO for acquisitions related to its core business, stock buybacks, or both," Lindsay writes.

The analyst applauds eBay's push to pare its business portfolio, citing its announcement earlier this week that it had sold recommendation engine StumbleUpon back to its founders. He also suggests that the company will continue to carve off noncore assets, including online ticket broker StubHub, which eBay acquired for about $310 million in 2007. - Olaf de Senerpont Domis

No Facebook widget makers for Spark's Sabet

2009-04-15T12:41:00Z

"We're looking for entrepreneurs that are taking on these very ambitious projects and that have passion about what they're doing and are really trying to do something very big," says Spark Capital general partner Bijan Sabet in Part 2 of The Deal's Behind the Money video interview. Spark recently launched a new seed-stage program to nurture entrepreneurs in New York and Boston, where Spark is based.

"It's not like we're sitting around at Spark, saying, 'We'd love to find a company that's building a widget for Facebook.' We're looking for something really different."

As an example of a startup with a big idea, Sabet points to Spark portfolio company Boxee, which develops media center software and which raised $4 million in December from Spark and its frequent New York co-investor, Union Square Ventures.

Sabet, who is 40, points out that entrepreneurs in their 20s and early 30s have a competitive advantage: They have never known a world without the Internet.

About Spark portfolio company founders David Karp (Tumblr Inc.), Charles Forman (OMGPOP, previously known as Iminlikewithyou) and Evan Williams (Twitter Inc.), Sabet says, "They grew up on the Internet. They're net natives. When they think about things, they have an instinct that is unique compared with entrepreneurs who are 10, 15, 20 years older."

Incidentally, in the video Sabet mentions having worked at Microsoft Corp. (NASDAQ:MSFT). Sabet joined the company as part of the team that created WebTV Networks, which Microsoft bought for $425 million in August of 1997.

Click here to see Part 1 of our chat with Sabet, in which he talks about co-investing with Union Square and others. Click here to see our video with Tumblr's David Karp, here for our video with OMGPOP's Charles Forman and here for our video with Boxee's Avner Ronen. Watch the video interview below or download it at iTunes.

Follow me on Twitter @MKFlynn. - Mary Kathleen Flynn

Also see:
Spark's Bijan Sabet on co-investing
Tumblr's David Karp on raising Series B
Iminlikewithyou's Charles Forman on selling virtual goods
Boxee's Avner Ronen on raising VC, competition, new features

For comments or suggestions about Deal Video, please contact mwoehr@thedeal.com. Use the following embed code to run this video on your Web site:

Bloggers: eBay never should have bought Skype

2009-04-15T12:37:00Z

"eBay is finally dumping Skype ... on the public market!" blogs a jubilant Henry Blodget, as the former Internet analyst sums up sentiment in the blogosphere about eBay Inc.'s (NASDAQ:EBAY) announcement late Tuesday afternoon that it would spin off its Internet video and voice calling service into a separate company and start the separation process by completing an initial public offering for the unit in the first half of 2010.

"The spin is good news for eBay investors," blogs Blodget on The Business Insider. "eBay never should have bought the thing in the first place. Now it can drop it, collect some cash, and focus on its core business."

EBay paid $2.6 billion for Skype in 2005, but integrating the acquisition has not gone smoothly. EBay took a $1.4 billion write-down on Skype in 2007. In a statement, eBay chief executive John Donahoe says the unit has "limited synergies" with its parent.

"Skype is a great stand-alone business with strong fundamentals and accelerating momentum," he says. "We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential." EBay said the process that led to the decision to spin off Skype started in April 2008, when Donahoe took over the company's reins from Meg Whitman.

Rumors this week had Skype founders and investors Niklas Zennstrom and Janus Friis teaming up with private equity firms to bid $2 billion for Skype. (Pipeline subscribers can learn more here.)

Tuesday's announcement marks the second acquisition that eBay intends to reverse this week. On Monday the company said that StumbleUpon, a recommendation engine, would be acquired by its original founders as well as several investors. EBay acquired the company two years ago for $75 million. Donahoe said that separating Skype will enable eBay to focus on its two main areas of growth: e-commerce and online payments. - Olaf de Senerpont Domis and Mary Kathleen Flynn

Solera finds $7M

2009-04-15T05:53:18Z

Solera Networks Inc., which develops software that helps track down network problems, is expected to announce on Wednesday a $7 million Series B round led by new investor Allegis Capital.

Previous investor Canopy Ventures also participated in the round. The funding follows a $5 million investment from Canopy a year ago and $3.9 million from the same investor in 2006.

Lindon, Utah-based Solera offers network forensics software, which can search and replay all network traffic to find problems and help fix them. The new funding will be used to boost sales and marketing, open a Washington office and expand Solera's Japanese operations, the company said.

Allegis managing directors Spencer Tall and Robert Ackerman will join Solera's board as part of the funding. - Olaf de Senerpont Domis