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The commotion was enough to knock down the shares of B2B company investor Internet Capital Group (Nasdaq: ICGE), itself 17% owned by Safeguard. On the other hand, Safeguard picked up a few percentage points of appreciation on the news, which was originally reported in this morning's Wall Street Journal. But in hindsight, the company's body language over the past few months hinted that this shift in focus was coming. Since mid-February, Safeguard has been quietly changing the boilerplate language it uses to describe itself in its press releases, gradually replacing the standby "leading business-to-business Internet-centric holding company" moniker with the new phrase "a leading Internet company focused on the infrastructure market."
Of course, investors should not be expected to comb over boilerplate language to find out whether their companies have shifted their business priorities. A standard press release will typically do the trick. In a missive from Safeguard's headquarters today, Chairman and CEO Pete Musser explained the move as another step in the company's investment evolution. "We have leveraged all of the major technology trends since the 1980s to the benefit of our shareholders, most recently with Internet Capital Group in the B2B e-commerce space, and see infrastructure as the next major Internet play," he said.
The press release also centered on the fact that Safeguard "is the first major Internet company to move into the infrastructure market." While that claim may be debatable from a variety of angles, Safeguard is definitely a trailblazer in another area that it failed to note. As far as this writer can tell, Safeguard is the first company to include a sell-side analyst's opinion of a strategic move in the official press release actually announcing the move to the public. And if you happen to think the opinion was seminal or objective at all in its analysis, then it's time to get off the crack.
"Safeguard has positioned itself as a leader in Internet infrastructure through its network of partner companies,'' said Merrill Lynch's Henry Blodget, he of Amazon.com price target fame. "By focusing on three areas -- software, communications, and eServices -- Safeguard is building critical mass with a core group of partner companies in three of the important sectors of Internet infrastructure."
Cynics could have a field day with this one, especially considering that the analyst's comments appeared ahead of the thoughts and views of Safeguard's own president and COO. That they came from Blodget, of all people, is the kind of bald-faced irony that would make Jay Leno's joke writers chortle with glee. Keep in mind that this is the same guy who explained a recent upgrade of Amazon to the The Washington Post by saying he wanted to "differentiate it from all the pieces of [expletive] we have buys on."
Sensing that the keg might be kicked at the B2B party, Safeguard is trying to stave off becoming just another piece of expletive itself by moving on and jumping into the Internet infrastructure fiesta while it is still in high gear. Staying ahead of the curve is a pretty rational strategy for a company like Safeguard, which can more or less be thought of as a publicly traded venture capital firm. With more than $375 million in its war chest from a recent secondary offering, investors should expect Safeguard to put its investment money where its strategic mouth is fairly quickly.
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