The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
April 18, 2000
In this week's report. . .
Starwood's Barter Effort Promises Big Change
Last Tuesday one of the top hotel chains in the world, Starwood Hotels & Resorts Worldwide with more than 700 locations, announced they were actively moving into the barter arena by signing on with BigVine. Starwood's inventory includes Westin, Sheraton, Four Points, St. Regis, Luxury Collection, and W Hotels...spanning 80 countries.
As a result of Starwood's deal with BigVine.com, announced on April 11, we can look for other national barter marketing agreements among barter companies and major hoteliers. This is one step promising significant change in the barter marketplace.
To his credit, Barry Sternlicht, chairman and CEO of Starwood, is cognizant of the opportunity to reach the small business market through the barter conduit provided by BigVine. Trade exchanges provide an ideal distribution channel to the unmanaged business traveler, which is, according to Sternlicht, one of Starwood's key customer groups.
Reinforcing Starwood's long-term seriousness toward the trading of its surplus hotel rooms the company announced that they are also making an equity investment in BigVine. Plus they will be promoting the barter exchange to the 4.5 million members of Starwood's Preferred Guest traveler program.
Focuses On Global 1000 Companies. . .
A new company, called eVolution Global Partners, will shepherd "old economy" global corporations onto the Internet. Assisting them will be some real heavyweights! eVolution's principals are Kleiner Perkins Caufield & Byers, Bain & Co., and partners of buyout firm Texas Pacific Group.
The three powerhouses intend to create a package of services they don't specialize in separately. They will then barter their collective services for equity (from 5% to 50%) in the new web companies, which will be developed for the international corporations.
Basically, eVolution's goal is to free up and harness the extraordinary corporate assets of the Global 1000 companies. The idea is to spin-off new internet businesses, leveraged from each one's core businesses.
New Environment For M&As and IPOs
With almost one year's gains taken away in a week of trading on the stock market, there's suddenly a new environment for M&As and IPOs. According to the Wilshire Associates Equity Index, the week of April 10-14 was a disaster.
The Index which represents the combined value of all New York Stock Exchange, American, and NASDAQ issues ended the week at $12.5 trillion, down $1.9 trillion from the previous week. It was still up from the $12.1 trillion of a year ago.
Currently, more than 50% of merger-and-acquisition deals see a company's "currency" (their stock) used to complete a transaction. Last year more than $3 trillion in corporate world-wide mergers occurred.
Two-thirds of all the M&A activity in the U.S. for the first quarter has taken place in TMT...technology, media, telecommunications...with the dollar volume up 75% from a year ago. (J.P. Morgan & Co's analysis of data provided by Thomson Financial Securities Data.)
That's about to change given the volatile stock market. So look for a softer M&A market, and a slowdown in the use of a company's currency to make acquisitions.
In the IPO (initial public offering) market, companies are already withdrawing or postponing their offerings. And with more than 300 companies already having filed to go public this year, compared with 486 that actually "priced" in all of 1999, the changing conditions guarantee that the pipeline will become very congested and backed up. Most likely, companies in the planning stages of filing will wait as well.
Knows The Key To Generating Revenue Online . . .
According to the Travel Industry Association, 85 million people book t ravel online, making travel the largest internet-commerce category with $7 billion sold on the web last year.
Yet, only Southwest Airlines has had a big success in bringing customers to its own site, which now generates 25% of its revenue. What's the key? They've introduced a valuable offer...trading customers a free round-trip ticket for every four round-trip flights booked online.
Lucent Technologies Trades On It's R&D Assets
Lucent Technologies placed a heavy barter bet on TeraBeam Networks, a startup that is using lasers to beam data through the air at high speeds.
Lucent will contribute cash, plus is trading on its other assets...engineering assistance plus their considerable research-and-development assets...all valued at $450 million.
In return Lucent gets a 30% stake in the new equipment company, plus all TeraBeam's products will carry the Lucent brand.
Recently T. Rowe Price Investment Services invested $105 million in TeraBeam's third round of venture-capital funding. TeraBeam is expected to launch its service commercially later this year.
Here And There...
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