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Specific Media Gets Into Video With N.Y Acquisition

Irvine’s Specific Media Inc., which runs an online advertising network, last month acquired New York-based Broadband Enterprises Inc., a provider of streaming video advertising.

Broadband Enterprises’ technology helps websites monetize, track and produce video advertising.

There are three parts to the acquired company’s business model.

For one, it serves up ads that appear before or after a video clip played online. It’s typically a 15- or 30-second advertisement that’s related to the content of the video.

Another leg of the business is technology that delivers the ads and measures their performance.

“It actually tracks whether the ad was served, whether the user clicked on it and how long the user watched it,” said Chris Vanderhook, Specific Media’s operations chief.

The third part of its business is creating custom content, such as short video series’ that integrate product placement.

Specific Media plans to keep some of Broadband Enterprises operations under the brand and run it as a subsidiary in their offices in New York. Other functions will be folded into Specific Media’s existing New York operations.

Specific Media, which doesn’t disclose revenue, makes money by buying banner ad spots on websites and reselling the space to companies looking to advertise to very specific groups of consumers.

The advertisers pay a 20% to 30% premium for the spots because of Specific Media’s “behavioral targeting” technology, according to the company.

The company can target consumers based on demographics, location and websites visited, among other criteria.

Specific Media didn’t disclose any terms of the deal for Broadband Enterprises. A Wall Street Journal report pegged the deal at about $55 million in cash and stock, citing a person familiar with the transaction.

Another trade publication, Media Memo, said Broadband Enterprises might have netted $65 million to $85 million.

Chris Vanderhook declined to confirm any figures.

Vanderhook and his brothers, Tim and Russell, started Specific Media in the family’s Yorba Linda home.

Tim Vanderhook is chief executive officer; Russell Vanderhook is senior vice president.

In 2007, the brothers opted for $100 million in private funding over a public offering.

The company said at the time it would use the money to acquire companies in the U.S. and Europe and to tap new types of online ads.

In 2008, Specific Media bought London’s Adviva Media Ltd. for undisclosed terms.

The company has some 150 workers here.

$14 Million to Go

Foothill Ranch-based Applied Voice & Speech Technologies Inc., which makes software that manages companies’ telephone systems, raised $4 million out of an $18 million venture financing round, according to a regulatory filing.

The money will be used for sales and marketing, according to Applied Voice, which is backed by Ignition Partners, Dolphin Equity Partners LP, Open Text, and Escalate Capital Partners.

Applied Voice doesn’t disclose financials. The Business Journal estimates that it’s raised some $30 million to date.

The company develops and markets software that manages voicemail, e-mail and fax messaging systems. The software answers calls, takes messages and notifies callers of events and alerts.

What’s different about its software is that it can be bolted on to an already existing telephone infrastructure built by companies such as Nortel Networks Corp., Cisco Systems Inc., Avaya Inc. and others, making it a cheaper upgrade than an overhaul to a system.

Applied Voice sells to companies via distributors and specialized telecom resellers.

It targets customers in higher education, manufacturing, healthcare and the government.

The company has its roots in Applied Voice Technology Inc., which was started in 1982 near Seattle.

QLogic’s Premium Player

Investors typically are assured by a methodical, orderly succession plan.

That might not be the case at Aliso Viejo’s QLogic Corp., a maker of electronics for data storage networks, according to one analyst.

On the heels of its quarterly earnings last month, QLogic announced that H.K. Desai, its founder and the only chief executive company’s known, is set to pass the reins to Chief Financial Officer Simon Biddiscombe this month.

Desai said he plans to stay on as executive chairman and continue his roles guiding product strategy and meeting with big customers.

“Some investors could be nervous about the future of the company as H.K. passes the baton,” said Kaushik Roy, an analyst at Wedbush Securities Inc. in San Francisco. “But H.K. has signed a contract and we have been assured that he will remain involved and active for the next three years, which should alleviate some of the concerns.”

Desai, 64, hails from India. He is the only leader QLogic has known since its 1994 spinoff from Costa Mesa’s Emulex Corp., its top rival.

Analyst Roy said QLogic’s shares historically have carried a premium over Emulex’s partly because Desai was in charge.

“Over the last decade, the stock has commanded a higher multiple than competitor Emulex most of the time,” Roy said in a research note. “This is partly because investors believed QLogic had ‘better execution’ with H.K. at the helm.”

Both companies make electronics that speed up the flow of data on corporate storage networks. Their top customers are makers of large storage systems and servers, including Hewlett-Packard Co., IBM, EMC Corp. and others.

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