The WSJ recently reported that Microsoft is sniffing around Facebook, less than seven months after investing $240 million in the social network at a $15 billion valuation. It was largely discounted as the hopeful fumblings of Steve Ballmer, in his search for a rebound acquisition after being dumped by Yahoo. But it got me to thinking: Microsoft’s initial investment may be one of the worst venture capital deals of all time.

Click here to read the full article.

On a related note, check out this uncomfortably literal depiction of Facebook from BBC’s “The Wall.”

Your middle-class parents have a combined household income of $115,000. You receive an allowance of $20 per week. If you save all your allowance for two years, how much debt will you have to finance to hostilely take over your family? How will you structure the debt?

Citigroup

“The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 percent. The Financial Times, which first reported the story on Thursday, said the moves would take place over several years.

Global economic instability has created huge investment opportunities for China Investment Corp, but the sovereign wealth fund’s head said he will be careful not to destabilize countries where it operates. CIC paid $5 billion in December for a stake in U.S. investment bank Morgan Stanley but has otherwise kept its powder dry as Western financial institutions have sought to replenish capital depleted by big subprime credit losses. “The current international market turbulence has produced unprecedented investment opportunities,” said Lou Jiwei, head of the $200 billion sovereign wealth fund. “In the 1990s, some hedge funds exploited defects in the macroeconomic policies of some emerging economies and attacked them, which damaged their economies and caused hardship for people,” he said. “CIC will certainly never do a similar thing.”

Sovereign Bancorp, the second-largest U.S. savings and loan, plans to raise just over $1 billion in an equity offering to help it navigate a difficult economic environment, according to a person close to the transaction. The offering will be broadly distributed to institutional investors and will likely be conducted over the weekend. Sovereign is determining how much Banco Santander, which has a 24.99 percent stake in the thrift, might participate in the offering, while keeping any transaction with the Spanish bank at arms-length, the person said.

Google expects to launch new products for its YouTube Web video service in the next few months and sees reason for closer cooperation with Yahoo, Google Chief Executive Eric Schmidt said. Schmidt has said getting the video sharing site to make money is the Web search company’s top priority for the year. He did not give details of the products, however, and they are not even in beta testing. The Web search leader played a large role in the takeover battle between Microsoft and Yahoo. During a two-week test, it sold search advertisements on rival Yahoo last month as part of Yahoo’s attempt to find an alternative option to Microsoft’s offer. Schmidt said the trial run provided good reason for the companies to discuss cooperation, but there was no deal yet.

Other deals of the day:

* U.S. private equity firm The Carlyle Group will lead a 58.1 billion yen ($560 million) management buyout of an LCD glass venture jointly owned by Japan’s Hoya Corp and Nippon Sheet Glass, Hoya said.

* Norwegian aluminum group Norsk Hydro said it has agreed to buy privately owned Spanish aluminum building systems group Alumafel for 77 million euros ($118 million).

* Shares in British engineering software firm Flomerics Group surged after rejecting a buyout offer from larger U.S. rival Mentor Graphics, saying it would explore interest from several other parties.

* A local fund managed by U.S-based Lombard Investments plans to buy 10 percent of Asiasoft Corp, Thailand’s top online gaming firm, for up to $11.3 million, partly via an IPO this month, an IPO underwriter said.

* Australia’s Macquarie Group is interested in buying a key part of German power giant E.ON as it prowls for investment opportunities, one of its top managers said.

Now I feel like garbage I read the Star Trib online and don't subscribe to the actual physical paper. Sorry .. guys! I would gladly pay to use the site here .. give it a thought. I am serious .. I will pay.

This comment was attached to an article posted to the Strib's Web site on May 6 that revealed that the paper's owner had to write down 75 percent of the $100 million it paid for its stake. Private equity firm Avista Capital Partners engineered a purchase of the paper from McClatchy Co, which was announced in 2006. Since then, the paper has hemorrhaged revenue, just like many other big-city dailies.

The write-down, taken at the end of 2007, reflects the estimated loss of value and is consistent with the falling stock prices of publicly held newspaper companies such as McClatchy and the New York Times. Avista's public accountants required the private equity firm to write down or "mark to market" the estimated value of the Star Tribune.

The memo denied a recent report in the New York Post that the Star Tribune may file for bankruptcy.

"The Star Tribune currently has sufficient liquidity and is up to date on all its debt payment obligations," said the memo, distributed by Avista.

And if this turns out to be wrong, daphne3620 and all her freeloading friends will have to pay a very big price indeed. (Me included.)

(Photo: Reuters)

At the annual Ford shareholders meeting on Thursday, Davis, who grills CEOs at hundreds of annual shareholder meetings, called the sale “outrageous” and urged shareholders to vote against the entire board except Executive Chairman Bill Ford Jr.

 ”Tata sells cars that are $2,500 to the lowest of the low outcasts of India,” Davis said, adding that Jaguar represented elegance and exclusivity. “How could the board sell us out to an outfit like that who sell to people like that.”

Ford has agreed to sell Jaguar and Land Rover to Tata in $2.3 billion deal that gives Tata a line-up ranging from the world’s cheapest car to some of its more expensive.

Davis also urged Ford to dump Chief Executive Alan Mulally, hired from Boeing in 2006, because he was “not a car guy.” She urged Bill Ford Jr, who had stepped down from that position to hire Mulally, to retake the CEO position.    

“I think you should go back to Boeing,” she told Mulally.

Bill Ford defended Mulally’s record as CEO, saying that his management has moved the turnaround quicker “than anyone thought he could.”         

After a repeated exchange with Bill Ford Jr., and requests for details on the company’s hedging practices for currency rates and commodity costs, and questions on the amount of legal fees it has to pay each year, Davis said: “Remember one more thing, a prime minister only serves at the pleasure of the king, and I want the king back,” she said.      

“If you are referring to me, thank you, but …,” Ford said. (The rest of his response was drowned out by Davis)     

“I want to dump all of the directors except you because you are my king, and you delivered me my Jaguar personally.”

“I paid a regular price by the way, for those who didn’t know that.”

Well, who knew Prime Minister Davis owned a Jaguar? Stay tuned for another set of interesting Davis comments — sure to come at GM’s annual meeting scheduled for June.

Who’s afraid of the big bad SEC? Not Phil Goldstein.

“The SEC is not there to protect investors,” scoffed Goldstein, an outspoken hedge fund manager in an industry shrouded in secrecy. “The SEC is so tied up in red tape and garbage that they are useless.”

Goldstein, who runs the $500 million activist hedge fund Bulldog Investors, was just getting going as he delivered an off-the-cuff address to investors yesterday in New York.

The former civil engineer, who started his hedge fund in 1992 at age 47 - an age when many successful fund managers are looking to retire - is now gearing up for a new campaign against what he says is useless and counterproductive hedge fund regulation.

Among his pet peeves “general solicitation” rules, which bar fund managers from pitching their strategies to “unsophisticated investors,” or people without money.

Most hedge fund managers interpret this as a gag order to varying degrees, forcing most to speak only “off the record” to the media and others for fear of arousing a reputation-damaging regulatory investigation or fundraising block.

Goldstein has a darker view, equating the fear to pre-World War II Germany, when no one challenged Nazis as they shipped Jews and gypsies off to death camps.

“This culture of silence and fear reminds me of how people acted when the Nazis started rounding people up,” Goldstein told an audience of hundreds of investors at an Argyle Executive conference, only half-jokingly.

And why not abolish “accredited investor” rules too? The rules - which basically bar anyone but millionaires from putting money into hedge funds - smacks of a Nanny State in which investors are protected from themselves, he said.

Anyone can invest and lose money in commodity futures, stock markets, mutual funds or gamble in Atlantic City - but not hedge funds. “Who the hell is the SEC to tell me what I can invest in?” Goldstein asked.

Goldstein has reasons to stick his finger into regulatory eyeballs. He won a lawsuit in 2006 that forced the SEC to drop rules requiring hedge funds to register as investment advisors. Now he’s being sued by William Galvin, the Massachusetts Commonwealth Secretary, for not properly barring his Web site from giving access to “non-accredited investors.”

“Galvin, up until recently, was an Eliot Spitzer wannabe,” sneered Goldstein. “He hates hedge funds. It’s like a modern day Salem witch trial. Anything that goes wrong must be due to hedge funds.”

Goldstein, who said he’s looking for legal support in an industry that is terrified of regulators, has some ideas on how history will view him. He compared his campaign to that of Rosa Parks, the 1960s black civil rights figure who refused to move to the back of the bus.

“A hundred years from now, no one will know who Steven Cohen is or John Paulson is,” said Goldstein, referring to two of the most successful hedge fund managers around today. “But they will all know Goldstein vs SEC. It will still be on the books!”

The SEC declined comment.

Murdoch: "From day one, the financial press has been fixated on portraying this move as a change in strategic direction; the company is now focused on allocating more of its capital on print businesses. That is not our intent, nor is it factually correct. We have not changed our playbook."

Murdoch argued that Dow Jones, the splashiest of his newspaper buys yet, is barely a newspaper publisher at all. To lay out that argument, Murdoch appears to have abandoned his earlier argument that a free Wall Street Journal online would be better than a subscription-based site.

WSJ.com still has more than 1 million paying subscribers, up 11 percent compared to last year. (It's unclear if he meant that the site added 11 percent more subscribers compared to the same period last year.)

Then there's the paper itself, where Murdoch sees big opportunities to boost ad sales and circulation volume and revenue. Individually paid subscriptions rose 1.6 percent to 1.46 million and overall circulation rose 0.3 percent to 2.07 million. Circulation revenue rose 6.8 percent in the quarter, slightly below the 7.3 percent growth in 2007.

Its biggest growth area remains its enterprise division, which houses the Dow Jones Index, Factiva and Newswires -- all of them subscription businesses. He says the Dow Jones Indices business revenue rose 37%, with profits up nearly 50% in the quarter ended March 31st. Factiva revenue grew 10 percent.

Dow Jones's financial information and services group revenue rose 13% , with profits up over 8%.

All this in the first quarter after the purchase! Then again, maybe Murdoch thinks some people have set the bar higher than that.

This is destined to be an extra-inning game; to use an overly used metaphor, we're only in the first innings. Those of you expecting to see immediate dramatic results in 12 weeks are kidding yourselves and setting an unrealistic bar. Over time, as we have done dozens of times at News Corp, most recently with SKY Italia and MySpace, we've made our acquisitions work, generating great returns to our shareholders. We'll do it again at Dow Jones. It may take time, but I am as confident of it as any acquisition I have done.

Then there's his Newsday bid, which was one of the more exciting parts of the conference call. Boxed in by Newsday reporters on the call, Murdoch spoke frankly about his confidence in landing the Long Island daily.

No, I don't think Cablevision will prevail. Just be patient for a couple of days (inaudible). We're certainly not in the business of getting into an auction here ...

We're hoping to wrap it up within the next week. And I don't mean the end of next week, I mean within the next seven days ... It takes two to agree. But we're at a pretty advanced stage. I'll just leave it at that at the moment.

Nope. No newspapers here.

(Photo: Reuters/David Moir / News Corp. Chairman and CEO Murdoch stands with Scotland's First Minister Salmond during the official opening of the News International press printing plant at Eurocentral near Glasgow in central Scotland.)

Let’s put them up on the big board!

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Talking about the plight of subprime lenders, he said:

“[It’s like] being a noodle salesman in Nagasaki when they dropped the A-bomb - not a lot of noodles left, and not a lot of people either.”

As Dan Primack of Thomson Reuters’ PE Hub observes: “Yeesh, foot meet mouth.”

Private Equity Insider, which first reported the statement, suggested that it could cause trouble for Blackstone in Japan, where the firm has had an office since last year. A Blackstone spokesman declined to comment when contacted by Primack.

"The conclusion was reached that we should pursue our independent path," Microsoft Chairman Bill Gates in Tokyo, May 7.    
    
"The key decisions on that will be made by Microsoft CEO Steve Ballmer, who took a look at Yahoo and decided that, on our own, he likes the stuff that we're doing," Gates in Seoul, May 6.

"We decided to move on and basically withdraw our offer .... Absolutely, that's the end of the story. We are moving on because our strategy is very clear," Microsoft International President Jean-Philippe Courtois to Reuters in London, May 6.

The globe-trotting Microsoft messengers have yet to fully convince Yahoo shareholders of their sincerity, since investors have propped the stock up to nearly $26 despite the break-up of talks over the weekend. That's well below Microsoft's last offer for $33 per share, but still perched higher than the $19-level, where Yahoo traded before the takeover offer was made public on Feb. 1.

Maybe shareholders are mindful of Microsoft's last world tour in April, when Ballmer hopscotched through Morocco, Italy and Belgium saying there was no way he would raise his initial offer of $31 for Yahoo. Two weeks, and two dollars per share later, Yahoo is still waiting.

Keep an eye on:

* Rupert Murdoch says News Corp is feeling the squeeze on advertising budgets due to a weakened U.S. economy; the company's division that includes MySpace will likely miss a $1 billion annual revenue goal by 10 percent. (Reuters)

* Warner Music Group's quarterly loss comes in worse than expected and the company suspends its dividend to raise cash and cut debt. (Reuters)

* NBC Universal is starting a 24-hour local news network in New York, in what could be the first of several such channels around the country, to help weather a weak local TV advertising market. (WSJ)
 
Photo: Reuters