Apple’s iPhone upgrade should sustain investors 8 Sep 2015 Boss Tim Cook is expected to unveil a new version of the company’s smartphone. If the product cycle pattern follows, it will elicit oohs and aahs but not drool. The event could, however, remind shareholders of one more thing: for a blue-chip stock, Apple trades at a big discount.
Apple has time on its side 21 Jul 2015 The iPhone’s frenetic Chinese growth powered a 33 pct rise in revenue. Marginally softened forecasts for the next few months nevertheless knocked $50 bln off Apple’s value. Minimal information about Watch sales also disappointed. A little patience, however, will go a long way.
Corporate divorce expenses matter beyond activism 1 Jun 2015 Acquisitive CEOs talk a lot more about deal synergies than costs. Warren Buffett once said he had never heard the word “dis-synergies” mentioned but had witnessed plenty. Managers under pressure to split companies may similarly overstate the negatives, but they’re still real.
Intel chips in for elusive post-M&A pricing power 1 Jun 2015 Its $17 bln swoop on Altera is the third big semiconductor deal of late. The six participants’ market caps have jumped by up to $35 bln. Cost cuts account for well under half that. The rest may reflect hopes that the acquirers can work magic on their top lines. That’s optimistic.
Avago offers textbook case for chip consolidation 28 May 2015 The serial acquirer is buying semiconductor rival Broadcom for more than $36 bln. Cost cuts should just about cover the 30 pct premium. Avago’s track record, the cash-and-stock mix and the logic of industry mergers all add up, too. Only an interloper could spoil the party.
HP improves on logic of its split 21 May 2015 CEO Meg Whitman originally thought separating the company’s PC arm would incur $1 bln a year in extra costs. The figure is now down to about $425 mln. That should help the split narrow the $61 bln HP’s stubborn conglomerate discount, even if it won’t create a glowing new future.
Would Microsoft really want to own Salesforce? 5 May 2015 Buying the cloud-based customer-service software could make businesses less likely to ditch Office. It might, however, cost Microsoft some $60 bln, more than all past deals combined. A bold bet for boss Satya Nadella would create earnings dilution that annoys his shareholders.
Huge Apple payouts play catch-up with China growth 28 Apr 2015 The $760 bln iPhone behemoth is adding $50 bln more to its buyback plans. Quarterly numbers, though, show the Middle Kingdom overtaking Europe as Apple’s second-biggest market after 71 pct growth. CEO Tim Cook is in danger of taking more fire for returning cash too slowly.
Tokyo Electron flop shows limits of M&A diplomacy 27 Apr 2015 Applied Materials’ $12.8 bln all-share takeover of the Japanese firm broke taboos in a country that is wary of foreign buyers. But after 19 months, U.S. regulators scuppered the tie-up. Investors will hope it doesn’t discourage other Japanese groups from considering bold deals.
Qualcomm activist spat a lesson for Silicon Valley 13 Apr 2015 Jana Partners wants the $114 bln chip maker to consider a breakup and reform its board. Hiding behind dual-class stocks, as some tech rivals do, may limit such meddling. But it wouldn’t fix Qualcomm’s problem of a sleepy board and entrenched management running it below potential.
Request for IBM activism likely falls on deaf ears 6 Apr 2015 Some big shareholders are begging for a Big Blue shake-up. They have reason to be dissatisfied – 11 quarters of falling revenue have sent the shares into a slump. Snag is IBM has already exhausted the typical activist playbook of tapping the balance sheet, buybacks and disposals.
Investors pay $20 bln for Apple’s $17,000 watch 9 Mar 2015 That’s the peak-to-trough slide in the iPhone maker’s market cap during its big reveal on Monday. Though the Watch starts at $349, it’s still Apple’s most overt fashion accessory yet. Shareholders may once again be underestimating the staying power of the company’s margins.
$15 bln tech M&A spree poor fix to limp sales 2 Mar 2015 Chipmaker NXP and networking gear firm HP need strong demand to compensate for falling prices. Trouble is, that has not happened. Buying Freescale and Aruba will help cut costs, build scale and fill in niches. But neither deal turns tech hardware into a growth market.
Sony’s Walkman sayonara is step in right direction 18 Feb 2015 Spinning off the division renowned for popularizing personal electronics is the latest mini-move from boss Kazuo Hirai to revive the Japanese conglomerate. The break with tradition could have more than just symbolic value if it augurs further efforts to tackle Sony’s discount.
Watch the small print in Qualcomm’s China fight 4 Feb 2015 Antitrust regulators are putting together a case against the U.S. chipmaker. If it’s found guilty, a big fine would grab the headlines. But forcing Qualcomm to lower patent fees, or banning the company from linking royalties to chip sales, could do greater financial damage.
Apple shines as Cook dishes up Chinese feast 27 Jan 2015 The tech giant overcame a strong dollar and stiff competition from Samsung in the Middle Kingdom, helping it to record Q1 iPhone sales of 74 mln worldwide. With the company’s watch near market and Apple Pay doing well, CEO Tim Cook has found a recipe to rival Steve Jobs’ success.
Intel fares better outside than inside 16 Jan 2015 The division that powers remote servers known as the cloud helped boost the chipmaker’s Q4 bottom line by 39 pct. Intel’s smartphones and tablets business, however, generated negative revenue because of incentives paid to customers. It may be time to hang up on the effort.
China’s innovators could use a patent war 6 Jan 2015 Conflict could breed creativity for China’s tech industry. New patents are being minted, but companies rarely go to court to protect them. There may be political reasons, but more discord would show Beijing is serious about enforcement, and not just against foreigners.
Chipmaker merger of equals may grapple with bugs 2 Dec 2014 Cypress and Spansion are uniting in a $4 bln deal with a balanced structure. Ownership and the board will be split evenly. Cypress, however, is paying a small premium and keeps the CEO and headquarters. The financial logic computes, but control usually ends up a feature in M&A.
Lenovo deals need cost control spark to compute 25 Nov 2014 The Chinese PC maker has just completed the purchases of IBM’s low-end servers and Motorola phones for a combined $5 bln. With few cost synergies on offer, Lenovo needs to jolt revenue growth and rein in overheads. Even then, earning a return on its outlay will be tricky.