OnLive Acquires OnLive

techfun89 writes with an update on OnLive shutting down. From the article: "The restructured OnLive has issued an press release and FAQ to attempt to clear up any rumors and misinformation on the companies recent changes. OnLive is emphasizing that the streaming game service will go on uninterrupted and the 'Newly formed company' will continue to use the OnLive name. The press release also outlines the Assignment for the Benefit of Creditors (ABC) process OnLive used to settle debts and that an affiliate of Lauder Partners, a technology investment firm, was the new OnLive's first investor. The firm talked about the necessity of laying off its staff, stating that 'neither OnLive, Inc. shares nor OnLive staff could transfer under this type of transaction,' and confirming that nearly half of the previous staff had been offered positions at the new company. The new firm mentions that this acquisition holds hope for the future 'of transforming the OnLive vision into reality.' This effectively means that OnLive was essentially bought out by OnLive, or rather, more specifically, one of their original investors in the company who backed the startup back in 2009."

Comments

heh

[Anonymous Coward]

Xzibit's head just blew up

we're fucked

[MickyTheIdiot]

just like we said. Corporate bastards can do anything the fuck they want.

Re:we're fucked

[rhsanborn]

I've put together a plausible scenario based upon the really vaguely written press release. I have no inside knowledge of the situation. If you know more, please correct me.

It sounds like an original investor held shares in OnLive(1). He lost all of his original shares of OnLive(1) just like everyone else. Rather than pump more of his own money into OnLive(1) and remain saddled with debt and overhead, he chose, along with others, to put the company through the bankruptcy process. Remember, he paid his own money to help start and run the company. He has no obligation to continue to support it personally.

He then used his own money to found OnLive(2). He used his own money in OnLive(2) to purchase the latent assets left in OnLive(1) and then proceeded to offer jobs to employees from OnLive(1).

So, it doesn't sound like all the investors in OnLive(1) divested the employees, kept their own shares and started over after screwing over the staff. It sounds like investor(s) bootstrapped a whole other company with a whole bunch more of their own money and bought the assets of the shell of the original company.

Re:we're fucked

[whoever57]

He then used his own money to found OnLive(2). He used his own money in OnLive(2) to purchase the latent assets left in OnLive(1) and then proceeded to offer jobs to employees from OnLive(1).

Purchase? From whom? Not the shareholders of OnLive(1) -- they get nothing. Perhaps the creditors of OnLive(1)?

Does anyone know how much OnLive(2) paid for the assets? Did OnLive(2) pay a reasonable price?

Sounds Like a Shell Game

[sanman2]

Sounds like some loophole method of getting out of your debts

Re:Sounds Like a Shell Game

[guttentag]

Sounds like some loophole method of getting out of your debts

Exactly. From TFA:

Unfortunately, neither OnLive, Inc. shares nor OnLive staff could transfer under this type of transaction, but almost half of OnLive’s staff were given employment offers by the new company at their current salaries immediately upon the transfer, and the non-hired staff will be given offers to do consulting in return for options in the new company.

So basically, "you're fired. Now, you can come back to work for us with no pay, just stock options that will be worth absolutely nothing when we do this again."

Like all shareholders, neither Steve [Perlman] nor any of his companies received any stock in the new company or compensation in this transaction at all. Steve is receiving no compensation whatsoever and most execs are receiving reduced compensation to allow the company to hire as many employees as possible within the current budget.

Right. Any time a CEO works for "no compensation whatsoever," it means they have an agreement in place for a ton of shares or options down the road. So, in effect, he makes it look like he got wiped out like everyone else, when in fact his compensation has just been swept under the rug/shell for safe keeping.

Re:Sounds Like a Shell Game

[Nationless]

I can't wait for the lawsuit where they sue the new OnLive for copyright breach and take them(selves) to court.

Re:Sounds Like a Shell Game

[gl4ss]

well, it's options to the _new_ onlive. this time it's legit! /s

Screwed Early Employees

[Anonymous Coward]

The ONLY reason to do this is to screw over the other early investors and employees who had options in the company.

Yet another reason why a minority stake (including options) in a private company is worthless. Dont work for options people, you should always assume that they are totally worthless, because they can be made worthless by things like this.

Ok, let's see you died in the wool capitalists

[rsilvergun]

This looks to me like classic example of a fundamental problem with free market capitalism. All perfectly legal too. So come on: defend this. Seriously. Not trolling. I'm dying to know why it is that we should tolerate this sort of thing.

Stuff like this is why countries have laws against firing people, btw.

Spin

[Tubal-Cain]

...confirming that nearly half of the previous staff had been offered positions at the new company.

I guess that sounds better than "we fired more than half of our employees".

OnLive is dead.

[drfreak]

Long Live OnLive!

But I like raging...

[rsilvergun]

when I see stories like this. Sorry, sorta hard not to do.

There's lots and lots of problems here, but the fundamental one is that the workers are at a marked disadvantage over the Capitalists. Those employees can't really do anything about any of this. OnLive wins, they lose. Even if they get a lawyer and go all class action they'll probably get nothing except a $5 off coupon for a 12 month subscription of OnLive.

I was just reading Wikipedia's articles on Voluntary Slavery and Wage Slavery. The point made by the Capitalists was you should have the right to sell yourself, the point made by the Socialists was that if you're in that position you're bargaining from such a weak stance that you don't really have any right's to begin with.

I guess my point is this: "Free Market" Capitalists argue that freedom will win out in the end. As near as I can tell this is either a hopelessly naive sentiment, willful ignorance, or a carefully calculated lie. I'm still waiting to be proved wrong. After all, it'd be nice to believe in the basic good of people and civilization. But I'm a cynical ole coot.

That's not what's happening here

[rsilvergun]

I've watched videogame companies bailed out by the owners. The president of Sega did it. He put up his fortune to keep the company afloat and lost most of it. That's not what's happening here. What's happening here is that a bunch of people were promised valuable stock options in exchange for a lower salary than they would normally command. They were then systematically cheated out of that using blatant and dishonest legal tactics. They've been defrauded in practice, just not legally. AOL did this too, and we all railed against them.

RANT MODE ON

And @$#! am I fed up with conservatards using the threat of job loses to keep us at each others throats. Better let the Job Creators do what they want or they'll take EVERYTHING away. It's there's after all. Mitt $#F#!@ Romney built it all with his own two hands. Him and John Galt. Jesus, what the hell is wrong with us? When did we become such a bunch of fsckin' cowards that we let these yahoo's push us around?

RANT MODE OFF