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August 01, 2007 | Comments: (0)
VoIP of the people
Why would a Big Box consumer electronics dealer be interested in acquiring a tiny Seattle ISP? That's the question people asked when Best Buy peeled off $97 million to swallow up Speakeasy in March.
Apparently the idea was to combine Speakeasy's broadband and VoIP services with Best Buy's Geek Squad, making the stores a one-stop IT shop for small businesses (kind of like having a little piece of Bangalore in your local strip mall).
But Best Buy may be angling for bigger fish. Well-placed sources tell me that the $31 billion electronics shark is circling the $485 million Covad, which actually provides broadband and voice service for Speakeasy's 40,000 customers. Whether it's just a co-branding deal or a full-blown acquisition isn't clear, but my money would be on the latter.
Covad's response when I inquired about the deal was about what you'd expect: The company won't comment on rumors, but will continue to deliver excellent VoIP, broadband, blah blah blah.
Meanwhile, vague rumors are swirling around Covad and an even bigger box retailer (whose tagline isn't "Always low ethics," but probably should be). The tea leaves have yet to settle on that one. Stay tuned for further developments.
Heard any good rumors lately? You can spread the word below or whisper them in my ear. Top tipsters will be in line to receive exclusive Cringe swag.
Posted by Robert X. Cringely on August 1, 2007 05:28 AM
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Its about time. Covad's stock is near worthless for any kind of network buildout. And is so low on cash that all of it must be keep just for day to day operations. So how does the co. grow? It can't, and it has negative earnings. An outright sale is best while the co is still strong. Hopfully a sale in the range of 1.5x sales or above will come, giving shareholders a price of $2.25. Of course any sale will be a stock-cash deal. With Best buy going from the $15 price to $44 in just 3-4 years its rich in stock.
Posted by: Pops at August 5, 2007 07:45 AMBest Buy probably didn’t know that Speakeasy resold Covad’s service. They may have thought they were buying the access.
The difference between Genius and Stupidity: Genius has its limits!
who says it has to be a stock-cash deal? best buy has some $4 billion in cash.
Posted by: yea at August 8, 2007 12:05 PM
