DealBook: SoftBank and Sprint Weigh Alternatives to a Deal

Yoshikazu Tsuno/Agence France-Presse — Getty ImagesMasayoshi Son of SoftBank, left, and Dan Hesse, chief executive of Sprint Nextel, announced their companies’ deal last October.

Eight months ago, Sprint Nextel’s path to recovery seemed clear: a sale to SoftBank of Japan and a deal to buy full control of the wireless network operator Clearwire.

Now that road appears significantly muddier, only days before shareholders are scheduled to vote on the two transactions, leaving both Sprint and SoftBank to weigh backup plans.

Much of the confusion has arisen because of Dish Network, which has bid for both Sprint itself and for Clearwire. Nearly two weeks ago, Dish raised its offer for Clearwire to $4.40 a share, stirring doubt that Sprint can prevail at a Thursday vote with its current bid of $3.40 a share.

Sprint directors have been waiting for Dish to formalize a $25.5 billion takeover proposal for Sprint itself. If that appears, it would top SoftBank’s $20.1 billion bid.

Sprint shareholders are scheduled to vote on the SoftBank offer on Wednesday, though the meeting may be postponed to give Dish more time to make its bid formal. Clearwire shareholders are set to vote on Sprint’s bid on Thursday.

SoftBank and its chief executive, Masayoshi Son, desire Sprint, the cellphone service company, as the cornerstone of a plan to challenge AT&T and Verizon Wireless in the United States. For Sprint, buying the roughly 50 percent of Clearwire that it does not already own would provide crucial extra bandwidth to build out a next-generation data network.

But Charles W. Ergen, the chairman of Dish, has managed to upend the carefully laid out plans of Sprint and SoftBank. Dish’s cash-and-stock bid for Sprint is worth about $7 a share, compared with SoftBank’s offer of roughly $6.45 a share.

Dish has sought a cellphone network partner that can help it take advantage of its big wireless spectrum holdings, helping transform the satellite television company into a provider of broader wireless services.

Still, people close to Sprint and SoftBank have expressed bewilderment at the moves by Mr. Ergen, a onetime professional gambler. Dish surprised many with the unveiling of its bid for Sprint in April, then embarked on an unusually pointed campaign aimed at raising national security concerns about the SoftBank deal. (The transaction eventually won clearance from the Committee on Foreign Investment in the United States, which oversees the review process.)

Dish first bid for Clearwire earlier this year, then went silent for months before raising its offer two weeks ago.

SoftBank has staunchly defended its bid for Sprint, repeatedly assailing Dish’s offer as unworkable, and won the conditional support of an influential shareholder advisory firm. The Japanese company has argued that it can close its deal by next month, while its rival would need much more time, costing Sprint shareholders money.

But SoftBank has been laying the groundwork for a potential backup plan: It has been in talks with Deutsche Telekom about potential options for the German telecommunication concern’s majority stake in T-Mobile US, according to a person briefed on the matter.

SoftBank and Deutsche Telekom were in talks even before the Sprint deal was announced last fall, and the two have kept in regular touch since, this person said. The Japanese company has stressed that it wants to find an entry point into the United States market, even if its bid for Sprint fails.

Word of SoftBank’s interest in buying Deutsche Telekom’s 74 percent stake in T-Mobile US, however, may simply be an attempt to sway recalcitrant Sprint shareholders.

Sprint shares closed on Friday at $7.24, more than 12 percent above SoftBank’s bid. Shareholders have argued that SoftBank must offer more for Sprint, especially in light of Dish’s higher bid.

Shares in Clearwire closed on Friday at $4.40, the clearest sign of investor dissatisfaction with Sprint’s latest bid.

Sprint has challenged the legality of Dish’s bid for Clearwire, contending that it violates an existing shareholder agreement. Dish has argued otherwise.

But Mr. Son of SoftBank has publicly said that he would be satisfied with Sprint owning less than 100 percent of Clearwire. Existing pacts with other big shareholders would furnish Sprint with more than 65 percent of Clearwire.

Still, Dish could prove a formidable hindrance to Sprint if it becomes a big minority shareholder in Clearwire, possibly forcing the company into a partnership or an expensive deal to buy out its unwelcome dance partner.

That is, if Dish doesn’t buy control of Sprint.

You're the Boss Blog: Finding Alternatives to Building a Web Site

Generating revenue along with the buzz.

Over my last two columns, I’ve discussed how not to hire a Web developer and how to build a Website you love. But for some small businesses, there are other options — alternatives to building or refreshing a Web site.

One option is a one-page site. This is a specialty of Carbonsquare, a design shop that builds business sites of up to 10 pages using customized templates on the Weebly platform. One of Carbonsquare’s clients is a fashion-accessories retailer, Debra Wood, who has a mobile fashion boutique, DebiFashion. Ms. Wood decided a one-page site worked best for her side business. “It was so much work to constantly change my shopping-cart Web site, so for a $249 investment, I can make the changes I want and not break the bank,” she said.

For a basic 10-page site, Carbonsquare charges $549 plus a monthly hosting and maintenance fee that runs about $30. “We decided to use the Weebly system because it’s a simple drag-and-drop system,” said Christopher Rippie, founder of Carbonsquare. “We want to help our customers understand smart design. Too many people over-design their Web sites. We did not use the WordPress platform, because it takes more time to build a Web site, which drives the cost up. We are trying to eliminate the sticker shock in Web site design and give people something they can manage themselves after we build it.”

Carbonsquare does have some drawbacks. WordPress plug-ins won’t work with the Weebly platform, search-engine optimization functionality is not built in the way it is with WordPress, and if you are blogging heavily, the system has limitations. Mr. Rippie suggests building a blog in WordPress and integrating it with the Weebly Web site.

Another option is to use Tumblr, a very easy-to-use blogging platform, as your Web site. With more than 100 million bloggers, Tumblr has an active community of users who search for content based on keyword tags. This can make it easier to build an audience quickly. It allows users to post text, photos, quotes, links, music and videos from a desktop or phone and from a  browser or through e-mail. A Tumblr page works best for visual businesses, such as retail, design, food, or fashion. Some small businesses use Tumblr in addition to a WordPress blog. Tumblr allows owners to link back to e-commerce sites with coupon codes, QR codes and links to other social media accounts. Its templates are easy to use and there’s nothing to download to get started.

Diane Souter of Absolutely Fabulous Unique Gifts and Décor in Huntington Beach, Calif., uses a Tumblr page to highlight her latest products and attract a younger audience. “Tumblr is so easy to do that I could do it,” she said. “I’m able to take a photo with my iPhone and upload it to Tumblr with the hashtags and keywords, within seconds literally, and it links to my Web site.”

Ms. Souter said that while the traffic from Tumblr leads to some sales, it mainly drives buzz. “It would be great if people could click on the picture and the price comes up with the ability to make a purchase through Tumblr,” she said. That might be a way Yahoo will attempt to monetize the site, now that it has bought it for more than $1 billion.

Three months ago, Innate Family Chiropractic, based in Pasadena, Calif., started using RebelMouse to host its Web site. RebelMouse allows companies to display the latest updates on their social media accounts on the company home page; in fact, those updates can be the homepage or they can an embedded addition. Users can customize a RebelMouse site or choose from previously designed theme pages. They can also post a full-text blog post directly to RebelMouse and then add an image or a video. And they can add RSS feeds from their own blog or from other blogs they read frequently.

Paul Berry, former chief technology officer of Huffington Post, says he created RebelMouse to save small-business owners time and frustration. “We just so saw so many people struggle with their Web site almost to the point of giving up,” he said. “We knew there was a simple solution that didn’t involve developers or designers. We wanted to make people’s content shine and amplify their social media efforts.” The service costs $10 a month and integrates seamlessly with MailChimp, the e-mail service.

Innate Family Chiropractic picked RebelMouse to save time with its Web marketing and because it wanted a central place to share content on pediatric chiropractic care. The three-year-old family wellness and chiropractic center uses Twitter, Facebook, YouTube, Instagram, and Pinterest to share and generate health-related tips and articles. “I used to spend so much time educating clients and putting our content on all our social media accounts,” said Christopher Vargas, a chiropractor and owner of Innate Family. “Plugging everything into RebelMouse just made things easier.” The company pays $19.99 a month to use the service on two Web sites.

Melinda Emerson is founder and chief executive of Quintessence Multimedia, a social media strategy and content development company. You can follow her on Twitter.

This post has been revised to reflect the following correction:

Correction: June 7, 2013

A previous version of this post referred incorrectly to the Web platform Weebly.

Gadgetwise Blog: Tip of the Week: Start Menu Alternatives for Windows 8

December 26

Harman has released the JBL OnBeat Micro speaker dock, which features the must-have Apple Lightning connector, but not much else.

December 26

Windows 8 offers keyboard shortcuts to jumping to the Control Panel, apps and other frequently used parts of the system that used to reside in the old Windows Start menu.

December 26

Brookstone has come out with an HDMI Pocket Projector, which contains a Digital Light Processing chip from Texas Instruments that can project high-definition images up to 1080p at 60 inches diagonal on a flat surface.

December 25

How to sell your own e-book using Apple's iBooks Author software.

December 24

The Razor Blade gaming laptop is extremely fast, extremely thin, and at $2,500, extremely expensive.

DealBook: In London, Nimble Start-Ups Offer Alternatives to Stodgy Banks

Hazel Thompson for The New York TimesAnil Stocker, a co-founder of MarketInvoice, a new financial firm based in London.

LONDON — When Hiroki Takeuchi joined McKinsey & Company in 2008, he had a front-row seat to the upheaval in finance.

After the collapse of Lehman Brothers, Mr. Takeuchi, a 26-year-old Oxford graduate, worked with some of the world’s biggest banks trying to figure out how to adjust to new regulations and a changed market. Then he quit.

For Mr. Takeuchi, memories of friends building successful start-ups at college outweighed the lucrative rewards offered by the blue-chip consulting firm. He joined forces with two McKinsey consultants, feverishly writing code out of his parents’ house on a minimal budget to create his own technology start-up.

The result was GoCardless, a London-based company that allows small businesses to set up monthly payments to suppliers at a fraction of the cost that banks charge. The business has secured $1.5 million in seed capital from a number of well-known investors, including the American early-stage venture capital firm Y Combinator.

“The whole idea of bank payments is broken,” said Mr. Takeuchi at the start-up’s office in a dilapidated building on the outskirts of London’s financial district. “There’s an opportunity here, and we’re looking to grab it.”

Hazel Thompson for The New York TimesHiroki Takeuchi, co-founder of GoCardless, a new financial firm based in London.

London’s fast-growing start-up scene is trying to disrupt the financial status quo. As consumers’ trust in banks deteriorates because of a series of recent scandals, young companies are pressing their newcomer advantage. Firms are offering services like low-cost foreign currency exchange and new ways for small business to borrow cash.

Backed by venture capital firms like Index Ventures, the financial start-ups are taking on entrenched incumbents by using technology to pare back costs and improve the customer experience. Local authorities do not directly regulate many of the firms, but the young companies often use traditional banks and other financial firms for their back-office functions, like processing payments, which are monitored by British regulators.

“Start-ups are taking advantage of London’s position as a global financial center,” said Adam Valkin, a partner at the European venture capital firm Accel Partners. “They are innovating in ways that banks just can’t do.”

The growth of finance entrepreneurs comes as London’s start-up community continues to flourish. Many parts of East London have transformed into a mini version of Silicon Valley, with the likes of Google opening shared office space to support fledgling companies. Finance, technology and fashion start-ups have been able to tap into the large talent pool of young, multilingual professionals eager to work for the firms.

Many companies are following the lead of Wonga.com, an online lender founded in 2006 that has sought to fill a void left by banks by offering short-term, high-interest loans to consumers and small businesses. The company has been criticized for charging high interest rates to vulnerable consumers. The typical annual percentage rate on the company’s loans is more than 4,000 percent, though Wonga.com says it only offers lending for a maximum of 30 days.

To cut down on costs, the start-up relies on publicly available online data to determine whether an applicant is creditworthy. Loans can take as little as 15 minutes to arrange, and the company has branched out from consumer lending into the small-business market as individuals look for alternatives to banks.

The tactics are paying off. Last year, the online lender reported a 269 percent rise in its net profit, to £45.8 million, or $73 million, after its loans increased fourfold compared with the previous year. Now, Wonga is now contemplating a multibillion-dollar initial public offering on Nasdaq, profiting from lending to consumers that are perceived as too risky for banks.

For many workers in London’s financial services sector, successes like Wonga have turned the idea of starting a business into an increasingly attractive option. With investment banking activities on the wane, job prospects in the industry have remained poor since the beginning of the financial crisis, and the financial sector here is expected to lose 25,000 jobs this year.

Anil Stocker has seen the layoffs up close.

Mr. Stocker, a 28-year-old Cambridge graduate, left Lehman Brothers a few months before it collapsed in 2008. A year later, he resigned from the American investment bank Cogent Partners to co-found MarketInvoice with two friends who worked at JPMorgan Chase and Goldman Sachs.

The start-up helps small businesses gain access to capital by selling their supplier invoices to investors at a discount.

“The finance industry will have to completely change, and we are just at the beginning,” Mr. Stocker said.

MarketInvoice wants to exploit an underserved market in the banking sector. As firms have pulled back on lending, small business have been denied credit because they are deemed too much of a financial risk.

To help these companies access cash, Mr. Stocker and his partners began an online marketplace where small businesses can auction their long-term supply contracts to money managers for the highest price. Many of these invoices can take up to 90 days to pay out, so companies are willing to sell them at a discount to get hold of short-term capital.

Starting the business has not been easy. It took MarketInvoice’s founders — who were still working for banks — almost a year to devise the business plan, and a further six months to raise $1.4 million from investors. The start-up auctioned its first supplier contract for £40,000, or $64,000, in early 2011, but only hit the £1 million mark nine months later.

“No one wanted to be the first company to use our system,” Mr. Stocker said. “At the beginning, you live or die by your reputation.”

London’s finance start-ups also are attracting entrepreneurs with a technology background.

Taavet Hinrikus, a 31-year-old Estonian who was Skype’s first employee, dreamed up his business while still working for the Internet calling service. In 2006, the company moved him to London from Tallinn, Estonia, where he rose to become Skype’s director of strategy. But Mr. Hinrikus grew frustrated after losing 5 percent of his salary to bank charges every time he moved money from Estonia to Britain.

After meeting fellow compatriots in London who wanted to transfer cash back Estonia, Mr. Hinrikus created a system in which individuals could move money to each other’s accounts. By agreeing to swap currencies at a set rate, Mr. Hinrikus said he saved thousands of dollars in bank fees.

“We had to find our own way to avoid the charges,” he said.

With his business partner, Kristo Kaarmann, a former management consultant, Mr. Hinrikus built a Web site that connects people looking to exchange British pounds with euros. Their start-up, called TransferWise, acts as an intermediary for the money transfers and has expanded into other European currencies.

Not everything has gone to plan. The start-up had to wait 18 months to receive its license to operate from British regulators.

Yet in its first 12 months, Mr. Hinrikus said TransferWise has helped people to exchange around $10 million of foreign currencies that has avoided costly bank charges. The start-up also has raised $1.3 million in seed capital from investors, including PayPal’s co-founder Max Levchin.

“Banks aren’t doing a good job at innovating for consumers,” said Robert Dighero, a partner in the London-based venture capital firm Passion Capital. “Start-ups are nibbling away at some of their most profitable businesses.”