Computer Hardware

Cisco stock luxuriates in low expectations

16 May 2013

The networking giant’s quarter to April was only mediocre. But boss John Chambers said the economic outlook is better, margins aren’t shrinking and sales are rising as expected. The stock rocketed more than 10 pct. At that rate, truly good news could make the CEO look a hero.

Apple iOUs may need to be as desirable as iPhones

26 Apr 2013

Right now, money managers are gaga for the company’s bonds even though they are sure to deliver stingy returns. But up to $55 bln of issuance over three years is on a par with huge borrowers like banks. To be sustainable, that would call for Apple’s category-creating magic.

$50 bln buyback hike one sign of Apple middle age

23 Apr 2013

The company is slowing down a bit, with margins slipping as rivals’ gadgets catch up. But Apple still has plenty of spring in its step, selling 65 pct more iPads in the March quarter than a year ago. And its absurd financial comfort means it can give much more back to investors.

Apple’s Chinese apology worth the loss of face

1 Apr 2013

Today’s prosperous iPad buyers in China may not be swayed by what seems to be state-orchestrated criticism. But the tech giant’s admission of arrogance is a cheap salve to future, less well-informed buyers who might, as the Apple CEO hopes, make the PRC his biggest market.

Dell blow-by-blow makes rival bidders’ jobs harder

1 Apr 2013

The PC maker has laid out, at length, its reasoning for agreeing to a $24.4 bln buyout by Michael Dell and Silver Lake. It’s only the company’s version, but Dell seemingly did pretty much all it could to secure the best offer available. A bidding war now looks even less likely.

Potemkin Dell fight would have optical merits

27 Mar 2013

Even if Blackstone doesn’t buy the PC maker, bidding against Silver Lake at least looks like rivalry in LBO-land, undermining allegations of collusion. Dell’s board also comes off as rejecting the bad J Crew precedent. A phony battle just won’t help shareholders much.

Blackstone, Icahn likely to stub toe on Dell

25 Mar 2013

Both are offering more for the computer maker than its eponymous founder. But the new bids rely on existing investors keeping a small public stake. In theory that obviates the need to get Michael Dell’s support. In practice, the downsides of such stub equity make it a long shot.

Dell counter-offer better in theory than practice

21 Mar 2013

Though backers of the $24 bln buyout are, oddly, talking down Dell’s prospects, investors rightly think the price is low - and Blackstone is kicking the tires. Still, the buyout firm’s losses on its last big tech LBO and Michael Dell’s role in the deal weigh against a higher bid.

HP board needs to add an "r" to evolution

21 Mar 2013

After Chairman Ray Lane and two other directors squeaked back into office with less than 60 pct of the vote, a board colleague said the body would “evolve.” A more radical shake-up of both directors and strategy is called for. A new chairman open to a breakup would be a start.

HP breakup requires new blood on the board

12 Mar 2013

It’s time for investors to hold the tech conglomerate’s directors more accountable. Investors lost nearly half their capital in 2012 as dysfunction and misguided M&A caught up to HP. Moving Chairman Ray Lane and others out makes a breakup easier to push forward.

Where did Apple’s missing market value go?

7 Mar 2013

The iPhone maker’s market value has declined by $260 bln in six months. A broad group of global rivals like Google and Samsung picked up less than half that. If Apple is fading, the Android complex could be worth far more. Or maybe it’s just that consumers will grab the spoils.

Intel sets up quandary in making chip for rivals

28 Feb 2013

Offering this service on a limited basis to companies like Altera is close to a free lunch. It helps Intel maximize manufacturing capacity and defray costs: building a semiconductor plant costs $10 bln. Expanding this business too far, however, could threaten margins.

Apple owners don’t need consumer-like innovation

22 Feb 2013

Investor David Einhorn’s idea of creating new preference shares is essentially an idea he proposed last year, with some fresh packaging. The trouble is it lacks the simplicity that is Apple’s hallmark. And for shareholders it’s not obvious “iPrefs” will have iPhone-like appeal.

Dell LBO objectors in tight corner

11 Feb 2013

Shareholders like Southeastern think Dell is cheap at $24.4 bln. They’re right: that’s why the founder and Silver Lake want to buy it. But the shares haven’t topped the offer in months or Southeastern’s valuation in years. Other options provide too little certainty to match up.

Apple and Einhorn could both use cleaner design

7 Feb 2013

The iPhone maker has combined three governance fixes better considered separately by shareholders. Also a bit unwieldy is an idea to unlock the value of the company’s cash that has led the hedge fund boss to try to block the changes. Both would gain from Apple’s famed simplicity.

Dell’s $24 bln LBO involves a club of one

5 Feb 2013

And Silver Lake, the sole private equity firm included, isn’t even really the club. Michael Dell is contributing his 14 pct stake in the PC maker, cash and an investment from his MSD Capital. Time was mega-deals needed a team of buyers. For now, they remain more exclusive.

Apple finally succumbs to uncreative destruction

23 Jan 2013

The iPhone and iPad catapulted Apple to investment royalty, but that five-year run is ending. Some $50 bln of value just vaporized after Q4 profit was flat. Copycats have caught up and margins are shrinking. CEO Tim Cook needs a real innovation to escape this Red Queen’s race.

Microsoft shows why tech cash needs a discount

22 Jan 2013

The software giant may put up $3 bln to fund a leveraged buyout of Dell. The PC maker is cheap and Microsoft’s investment record, including Facebook, isn’t bad. But a Dell financing would divert money that could be returned to shareholders to plug holes and postpone obsolescence.

$20 bln Dell LBO could be worth the stretch

16 Jan 2013

It’s too big for one buyout firm, and club deals are infamous – think TXU. Moreover, the computer maker’s shrinking business doesn’t look that attractive. But an LBO could still deliver high returns because – unlike bubble-era targets – Dell is cheap.

HP admits breakup is on the table

2 Jan 2013

The troubled $29 bln tech pioneer has maintained that splitting up would be a mistake. But in its new annual report, HP says it may sell assets. It’s a no-brainer for the board to consider a breakup. After all, the stock is trading far below the value of the company’s parts.