Filed under: Deals, Good news, Press releases, Industry, Competitive strategy

An International Paper (NYSE: IP) press release announced this day that the company is intending to buy the Containerboard, Packaging and Recycling (CBPR) businesses of Weyerhaeuser (NYSE:WY)for $6 billion in cash. The deal is expected to shut in Q3 2008, subject to regulatory approval and financing.

Due to the realization of tax benefits based upon International Papers buy of Weyerhaeuser assets rather than stock, IP shall realize tax benefits in the amount of approximately $1.4 billion, making the actual purchase price closer to $4.6 billion.

International Paper Chairman and Chief Executive Officer John Faraci is quoted in the press release as stating: “This deal represents a compelling opportunity for International Paper and our share owners at a very attractive valuation… integrating Weyerhaeuser’s CBPR business into our North American packaging platform fits very well with our strategy to improve our earnings, cash flow and returns by strengthening existing businesses. We anticipate the combined packaging business will generate stronger cash flow and higher EBITDA margins than either standalone business.”

Even though International Paper sees considerable upside potential in this acquisition, as of this writing, shares of International Paper have lost nearly 8.5 percent on the day. This might signal a good near term chance to buy into company shares when considering that the company indicates this deal holds income increase potential of as much as $400 million annually. The company sees this acquisition improving profitability over a three year period of assimilation, with approximately 40% of that improvement to be realized within the first 12 months of closing the deal.

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Filed under: Competitive strategy, Google (GOOG)

Google, Inc. (NASDAQ: GOOG) continues to have the ambition of becoming the largest advertising company in the world. Well, at least that’s the thought I’ve held for over two years now. Is it a coincidence that Google’s on the internet revenue growth in 2007 was larger than the combined advertising revenue of the 17 top offline media companies? No.

Henry Blodget, who couldn’t be trusted as a Wall Street analyst (which is why he isn’t one any longer), runs Silicon Alley Insider and contrasted Google’s growth with media powerhouses Viacom, CBS and Clear Channel (among others). He came to the conclusion that Google is pounding up hard on the media landscape as it comes to taking ad revenue share from just about anyone in the business.

Blodget says: “A single media property, Google.com grew by $2 billion. All the offline media properties owned by the 13 offline media companies — all of them — grew by about $1 billion.” After looking at the 13 other companies, it’s not hard to imagine that Google beat them all — combined. This isn’t a surprise to me at all — Google’s foray into advertising isn’t a mistake and the way it’s taking market share is also not a mistake. In the U.S. alone, Google’s ad revenue totaled about $8.7 billion for 2007 — up 44% from 2006 revenue. That’s 5.7% of $153.7 billion spent on advertising in the U.S. last year.

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Filed under: Deals, Consumer experience, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

Google (NASDAQ: GOOG) is hardly prone to benefit from a Microsoft (NASDAQ: MSFT) buyout of Yahoo! (NASDAQ: YHOO). Having a bigger competitor with a more massive piece of the search market hardly does it any good. The “merger” of the two companies also creates that largest display ad company in the world.

But, display advertising isn’t a fast-growing business. Google’s search operation is, and it will continue to have , more than 60% of the market in the US.

Perhaps because its share price is down so much, Google has begun kicking about the proposed marriage. According to Reuters, Google CEO Eric Schmidt stated, “We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be.” The search company is probably trying to hint that Microsoft would “use” the new company to promote its software agenda to the detriment of consumers who simply want to use the internet for information and entertainment.

It may be a reasonable argument to get regulators to look hard at the potential deal, but Microsoft isn’t that stupid. It is very likely to comprehend that pushing its products to users and hurting access to the normal experience of getting everything from sports scores to news about Madonna won’t fly.

Google can hardly talk. It pushes its Google Apps software, its e-mail and mapping products to people who come to the site to use its search features. None of the big internet sites is “pure”. They do have to make money.

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

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eldavojohn writes “A settlement has been reached in the Verizon GPLv2 violation suit. The now famous BusyBox developers, Erick Andersen and Rob Landley, will receive an undisclosed sum from subcontractor Actiontec Electronics. ‘Actiontec supplied Verizon with wireless routers for its FiOS broadband service that use an open source program called BusyBox. BusyBox developers Andersen and Landley in December sued Verizon — claiming that the usage violated terms of version 2 of the GNU General Public License.’”

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MachineShedFred writes “The Supreme Court of the United Says has announced that it will be hearing the FCC’s appeal to the 2nd U.S. Circuit Court of Appeals’ decision that the FCC has changed its policy on fleeting expletives without sufficient explanation. It’s now on the FCC to explain to the Supreme Court why its policy has changed. This is also the first time the Supreme Court has heard a major ‘broadcast indecency’ case in 30 years.”

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kernowyon writes “The BBC has an interview with Sir Tim Berners-Lee during his visit to the UK on their website currently. In it, he voices his concern about the practice of tracking activity on the internet — with particular reference to Phorm. Quotes Sir Tim with regard to his data — “It’s mine — you can’t have it. If you want to use it for something, then you have to negotiate with me.””

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buzzardsbay writes “Baseline is reporting on an upcoming survey from Symantec and Applied Research-West that confirms many suspicions about the generation gap in the workplace, namely that younger workers will use your corporate network to run most any device, technology or social networking software they have the ability to get their hands on. Dubbed “Millenials,” these workers born after 1980 are nearly twice as likely to use cell phones and PDAs at work, and half admit to installing unauthorized software on their employer’s computers. On the upside, the Millenials are more security aware than their older co-workers.”

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Ezhenito noted some research pointing out the (maybe) surprising bit of research that 6 botnets are responsible for 85 percent of the world’s spam. That seems a bit high to me, but the only aspect of spam I’m an expert in is *getting* it.

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arogier writes “After numerous delays and an actual release reversal, the official release date for Vista service pack one has been set for Tuesday, March 18th on Windows Update and Microsoft Downloads. It will be released as an automatic update on April 18th. ‘It’s unclear so far how a February snafu will affect SP1’s roll-out. Last month, after Microsoft pushed a pair of prerequisite patches to users, some reported that their machines refused to finish installing one of the fixes, then went into an endless series of reboots. Several days later, Microsoft pulled the update from automatic delivery, stated it was working on a solution and promised it would “make the update available again shortly after we address the issue.”‘ It would be a good time for those planning to adopt early to perform requisite backups and locate their restore media.”

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