Biz Break: Zynga may delay IPO as Cisco looks to buy smaller firms

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Today: A report says that hot IPO candidate Zynga may delay its public debut. Also, Cisco (CSCO) buys an S.F. startup — which could become a trend for the S.J. giant — and the markets jump after Irene

Zynga looks to delay initial public offering, sources say

A Monday report in the New York Post, citing unidentified sources, said Zynga is looking to push back its initial public offering due to the current volatility of the stock market.

Zynga’s IPO is one of the most buzzed-about in Silicon Valley, as the San Francisco social-gaming company has already shown a profit and sources believe it could bring in up to $1 billion in revenue this year, according to previous Mercury News reports. In its original SEC filing, the company said it was looking to raise $1 billion at a valuation of $10 billion.

However, Wall Street’s recent unpredictable swings have caused several companies to pull away from IPOs, with more

companies withdrawing their planned public offerings this month than in any since December 2008, the Associated Press reported last week.

“It makes sense for a bank to protect its clients from a market that could potentially be a bottomless pit,” a source told the Post.

Two Silicon Valley companies that went public this year — Pandora and LinkedIn — performed well with their initial offerings but have dropped since, with AP reporting that Pandora has dropped nearly 20 percent since its IPO and LinkedIn losing almost a quarter of its stock value.

Zynga’s filing has been problematic, as the company had to revise its original SEC paperwork with a 600-page amendment that analysts said showed just how intertwined Palo Alto social-networking giant Facebook and Zynga are.

However, with Facebook’s IPO timing still a mystery, a delayed Zynga offering may not be an issue, as long as it happens first.

“I think people in some way will look at (Zynga’s) IPO as a proxy for investing in Facebook,” Sumeet Jain, a principal at San Francisco investment firm CMEA Capital, told Mercury News staff writer Peter Delevett last month.

Cisco buys startup, analyst says they may buy more

Cisco picked up a small San Francisco startup Monday, buying Versly for an undisclosed sum.

The company produces software that allows workers to collaborate within Microsoft Office documents, integrating email and highlighting other users and their changes. Cisco plans to eventually integrate the software with its enterprise portfolio, which includes the social-networking feature Quad, the Jabber instant-messaging service and WebEx web-conferencing.

Zeus Karravala, an analyst with Yankee Group, said that the move could be a harbinger for Cisco, which could be ramping up acquisitions again in the United States, but keeping them small.

“If Cisco is going to be a ‘shopaholic’ again, it is going to be built off of smaller buys (in the U.S.); if they’re going to buy larger companies, they will be foreign,” Karravala said. Cisco could look for larger domestic acquisitions if the Obama administration allows a repatriation holiday, which would allow companies to bring funds in from overseas at a lower tax rate for a set amount of time, he said.

Cisco stock gained $0.42 to $15.74 Monday, a 2.7 percent increase.

Markets up after storm, with Nasdaq and LinkedIn leading way

After Hurricane Irene drenched the East Coast but left behind little serious damage, Wall Street perked back up Monday thanks to increases for insurance companies, utilities and tech stocks.

After estimates last week predicted that Irene would do up to $14 billion in damage, initial estimates of actual damage came in Monday about one-fifth that amount, leading to big jumps for insurers like Allstate, Hartford and Travelers. East Coast utilities also saw increases, helping the Dow and SP both rise more than 2 percent Monday.

“There’s a sigh of relief that the hurricane didn’t do anywhere near the damage people feared,” said Tom Donino, co-head of trading at First New York Securities, told the Wall Street Journal, which also reported that the Dow is nearing break-even for the year.

The biggest gainer of the three major indexes was the tech-heavy Nasdaq, however, which jumped 3.3 percent thanks to gains of 4 percent or more from Silicon Valley stocks like Hewlett-Packard (HPQ), Oracle (ORCL), Yahoo (YHOO), VMware and AMD. One of the biggest gainers of the day was Mountain View-based social-networking website LinkedIn, which jumped more than 10.5 percent.

Silicon Valley tech stocks

Up: LinkedIn, Yahoo, Hewlett-Packard, Oracle, VMware, AMD, SunPower (SPWRA), Tesla, Adobe (ADBE), eBay

Down: No major companies.

The tech-heavy Nasdaq composite index: Up 82.26, or 3.32 percent, to 2,562.11

The blue chip Dow Jones industrial average: Up 254.71, or 2.26 percent, to 11,539.25

And the widely watched Standard Poor’s 500 index: Up 33.28, or 2.83 percent, to 1,210.08

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, the Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.

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