The Tweet heard round the world
CNBC’s Julia Boorstin reveals some of the early Twitter investors positioned to make big money on its IPO. CNBC’s Kayla Tausche provides a look at some of the bankers involved. Also, Carly Fiorina, former HP chairman & CEO, discusses how the social media company’s IPO will impact the rest of the the tech sector, and why Michael Dell has less than five years to prove his strategy of going private is working.
first up, the tweet heard ’round the world. twitter announcing via twitter, of course, it’s filed for its longawaited ipo. who are the early investors that might be making some big money? julia boorstin has more outside twitter headquarters in sanfrancisco. good morning, julia. good morning, carl. twitter has raised about $1.2 billion from a range of high-profile individuals and vc funds. twitter’s three co-founders are likely to hold significant stakes. that’s chairman jack dorsey, who’s also ceo of mobile payments company square, plus evan williams and biz stone, both of whom no longer work at twitter. twitter’s ceo invested in the company’s first investment round back in 2007.that’s two years before he joined the company as chiefoperating officer. legendary vc mark andreesen also got into the first round of funding, coming in the next year, jeff bezos, the expedition fund, as well as ron conway, known as the godfather of silicon father, and tim ferris, known for writing the four hourwork week. it’s not just american investors. saudi arabia prince alal invested in twitter in 2001. he didn’t buy the shares directly from twitter but through the secondary market. that’s how he made the purchase. the vcs and institutions who invested who are a hodge who’s list of the heaviest hitters in silicon valley. sv angel could see a huge payday as they got into the first round of investing. spark capital, charles river, benchmark also participated in several rounds. t. rowe price and morgan stanley snapped up a piece back in 2009. coming in later with bigger checks, but twitter had a higher valuation, silicon valley giants cliner perkins and draper fisher jerveson, as well as dst global. now, the investors’ paydays hinges on what the s-1 reveals about the company’s financials. e-marketer estimates there’s about $580 million in revenue this year, about half of that coming from mobile. both of those numbers are, of course, expected to grow. the one factor analysts point out in terms of twitter’s growth prospects, the fact it has only 240, 240 million daily active users. compared to facebook, it’s not that much, which means there is significant growth potential. carl? thank you very much, julia boorstin, in san francisco right outside twitter’s headquarters with that fancy sign. meantime, kayla has some more on the bankers involved in the ipo. good morning, kayla. good morning, kayla — you’re not care la. i’m kayla. i go buy kayla, too. sometimes you do. it’s friday. we’ve all had a long week. carl, it seems like it’s bankers singular. we don’t know much about the contents of the s-1, but we know it won’t contain the full slate of banks. the lead underwriter, the onlyone with a confirmed role is goldman sachs. they’ll be the oracle and providing advice in how to structure the deal.goldman sachs has raised the most for clients in ipos, some5.2 billion in proceeds, according to renaissance capital.followed by jpmorgan and then tech powerhouse morgan stanley. wall street expects most if not all of the banks to have a role in the deal, just not exactly the top decision-making power.and it may have surprised someone not to see morgan stanley in that seat, even after its role in facebook’s debacle. that hasn’t really had a material impact on morgan stanley’s ipo business.on one hand, twitter is said to want to avoid the optics its ipocould go the way of facebook’s. on the other hand, there wasalso a very real conflict of interest for morgan stanley in advising on the ipo of twitter’s biggest competitor. buy side investors, carl, say they expect twitter to be priced conservatively, even if it means leaving money on the table. they say the company will have a better shot of keeping the reputation intact during therocky road of being public if there is guaranteed upside. of course, we’re looking for more information and we’d love to get a lock at that s-1. carl, that’s the latest for now. that’s a lot of information, kayla. you brought a lot of it to us first, thanks a lot.for more on how a twitter ipo would impact the rest of the tech sector, let’s bring in carly fiorina on the news line. carly, good to talk to you again. nice to be with you, carl. thanks for having me. kayla mentions keeping expectations low. how many lessons did we learn from facebook? well, you will remember,carl, you and i had this conversation many times and simon and your other hosts, as well, that overhype destroys an ipo every time. and facebook was overhyped from the beginning. let us hope that twitter learned the lesson of that. it’s hard, though. it’s hard to dampen excitement when an ipo has been anticipatedfor this long. yeah. you know want to obviously keep your head about you. on the other hand, you do want to build some excitement, right? i mean, you do want there to be an appetite on day one. you think at the very least it’s important that they establish a valuation. explain what you mean. well, look, who knows whether twitter will stay a public company for the long term. i mean, the story of tech is that smaller companies come up with the great innovations that ultimately scale is necessary to truly capitalize on them. so, of course, twitter’s goal is to remain a public company, but perhaps a larger company willbuy them at some point. the only real way to establish avaluation is to go through an ipo process, and so, that’s whatthey’re doing. of course, they have investors, i’m sure, looking for a way to cash in at this point. you made the point, the techsector for a long time, got the reputation for being a fail-safebet. i got to imagine, carly, after a pretty wide spectrum ofperformance of various ipos, we’re looking at some socialnames right now, zynga down 70, but zillow up 400. maybe that fail-safe bet notion has been discounted somewhat, right?well, i hope so. and i think the examples you gave — zynga is a classic. i was amazed for a while that people seemed to have forgotten the dot-com bust so completely, where, you know, so many people just got wiped out. but, look, we need to remember tech is inherently risky. there are many innovations that are great but can’t scale, and don’t go anywhere. that’s why venture capital is so important. but let’s hope this is thesuccess. i do think that it’s important to remember that twitter has a lot of growing competition, and i think it’s also important to remember that consumers are actually getting kind of sick ofall of the ads interfering with their wonderful experience. you know, there are pieces of hardware around now, like ad trap, which is able to clean all of the ads off the internet feed. i think that will be interesting to watch, how these companies really can — yeah, carly, want to get your reaction to our interview thismorning, an exclusive with michael dell. let’s take a quick listen. we think the pc and tablets and virtual clients actuallycontinue to have a very important role in productivity. and, you know, consolidating industries, you know, leading companies can do just fine. dell will participate in tablets and all sorts of, you know, client devices. we’re not — you know, not getting in the mobile phone business. we do resell some other — someother, you know, leading mobile phone products. but really, our main business is helping our customers secure, protect their data, and access it from any device they want to. carly, i want to know what you make of — you know, whether or not some believe he’s calling it the world’s biggest start-up. others are saying michael dell’s the dog who finally caught the car. what do you do now? well, it’s funny, the world’s largest start-up.that’s what we called lucent many years ago, and we took itpublic. you know, i think the skepticism around michael dell’s play here is that he’s had quite a long time at the helm to try and do what he wants to do now. so the issue, i think, is was itreally being public that was getting in his way? is it really true that the investment horizon just wasn’t long enough given all of the pressure of the public market? i think time will tell. but i think he’s going to have less time perhaps than he wants when he starts to talk about five and ten-year horizons. i mean, technology moves too quickly. sometimes companies run out of time. so i think he has a lot less than five years to prove thatthis is going to work. less than five years, but more than one year? how short is the — i think — yeah, i think more than one year. but i don’t think it’s more than a couple, honestly, because he’s been on this for a really long time. dell has been talking about being a full-service provider for his business customers for a long time. it hasn’t played out particularly well. and i think, in part, that’s because this is an industry that is now in desperate need of consolidation. i mean, these platforms, the costs need to come out year after year, supply and distribution channels are everything. i just think there’s more consolidation coming in this industry, and whether he can avoid that by being private, i think time is going to tell. but not a lot of time. and finally, carly, obviously dell going private. amd going into the s&p midcap. and i’m sure you know by now, hp will be taken out of the dow. what was your reaction to that? i think it’s a sad day.and i think it demonstrates the fact that sometimes companiescan run out of time to turn around. i’m not saying hewlett-packard is going out of business. nothing like that. it’s a huge company. but i think technology moves so quickly now. the competitive space is so intense that timeframes are shorter and shorter. and if you look out at great, you know, great companies, kodak has ran out of time. blackberry ran out of time. companies, even big companies, can run out of time. to keep up and keep ahead. yeah. carly, have a great weekend.thank you for your insight today.
Michael Dell speaks out on buyout battle
In an exclusive interview, CNBC’s Maria Bartiromo talks with Michael Dell, Dell chairman & CEO, about his long, drawn out buyout battle to take his company private and how he plans to turnaround the PC maker.
enterprise, number one,ch you’ve spoken a lot about for dell, even though most people look at this company as a pc company. you mentioned pcs. i want to get into that as well mobility. we all know pcs have put the company in a different place. pc sales are declining, they’re expected to be down 7% this year, global pcs as well as the following year. how are you going to stay in that leadership position and thrive when in fact this is an industry that is getting its lunch eaten by mobility and devices? we think the pcs and tablets and virtual clients actually continue to have a very important role in productivity. you know, consolidating industries, leading companies can do just fine. if you take a look at dell’s revenues and our client business, we actually have, you know, very nice scale in that business. we are much more of a commercial than consumer, though we’re growing our consumer pc business as well. again, we’re the only ones that are growing share at least for the moment. i think the more important thing is that the client device is part of the end-to-end solution and it’s a great way for us to introduce ourselves to many customers, leading into the enterprise, you know, dell now has number one share in servers, in north america, in apj. and soon the world. and dell is shipping more terabytes of storage than anybody on the planet. so we’ve used this foundational business of client computing and extended that into the data center, software, systems management, security. today dell is a very different company than it was five years ago. we have a $21 billion enterprise software and solutions business that, you know, has grown from roughly $10 billion just five or six years ago. quite excited about our future. the opportunity to invest, to reallycus on our customers, get all this distraction behind us. couldn’t be more excited, maria. what about distraction. a number of people have said this has been such a disaster the last several months, this public fight with carl icahn and t-rowe? did that take away the demand? some customers were worried. in the process they’re not going to wait around while this fight is going on, they’re going to move to a competitor. how much of an issue was this battle in terms of customers? let me take this opportunity to thank our customers for not being too distracted by it. there was some distraction for sure. the team at dell did a great job of staying very focused. one of our principal competitors also had a 9% change in their business, except in their case it was negative. so we’re playing offense, we’re on the attack, we’re growing, expanding our share. this is the dell that many of you are very, very familiar with and you’re going to see it in all of its glory. absolutely. let me ask you about that enterprise business. you said revamping the enterprise computing services business is best performed out of the spotlight, i get that, doing it as a private company. but when you look at an enterprise business, we all know ibm is the leader here and ibm is struggling, putting out proposals in terms of how to modernize the cia business. who do they choose? not ibm. amazon web services. how competitive and tough is amazon as a competitor right now for you? this is a very large business space. we just migrated the singapore stock exchange off of their main frame, put it on an industry standard platform powered by dell. we’ve done 1,300 of these main frame migrations. the thing to remember about our space is this is a $3 trillion industry that’s going to be a $6 trillion industry. dell has 3% but nobody has 4% or 5%. it’s incredibly disbursed, large number of companies. we’re providing the infrastructure for a lot of the cloud companies that are out there. you know, dell is the leading provider of the servers, the storage, the networking that go into all these clouds that are being built around the world. that’s a fantastic business for us, as well as being able to bring news services for companies that want to build their own private clouds, which is really the predominant trend that we’re seeing. we’ve also done a lot to bring these technologies together. we introduced a revolutionary product a few months ago called power edge vertex, which brings together networking, storage server into one platform that’s essentially a cloud in a box. service providers, cloud systems, companies, all kinds of independent software developers, large companies, small companies all over the world are adopting this platform very rapidly. fair enough but at the same time here we are talking on a day that twitter is going public and of course ing it’s going public and twitter benefiting from this huge surge in mobility. where’s your mobile product? where is your footprint in mobility? twitter’s a great customer. it’s a great example, maria. every time a new mobile company gets born, they need servers and infrastructure and storage and companies need to be able to protect and secure their data on these mobile devices. so what we’re doing at dell is helping our customers access this information in a secure way, in a protected way and powering those clouds that are being fueled by this enormous explosion of mobile devices. and for sure dell will participate in tablets and all sorts of client devices. we’re not getting in the mobile phone business. we do resell some other leading mobile phone products but really our main business is helping our customers secure, protect their data and access it from any device they want to. michael, we’re going to leave it here for the live portion of this interview. what i want to focus on now is your legacy. i don’t know that a lot of people thought you were ever going to give up this fight. your name is on the door. we’ll talk about that on the closing bell. for now stay right there. we’ll continue our conversation for the closing bell and i’ll