Electrical Equipment

Samsung investors hope for dynastic dividend

28 Jul 2014

With its patriarch in ill health, the group whose revenue equates to almost a quarter of South Korea’s GDP has kicked off a big restructuring. Cleaning up ties between the 70-plus companies should create value, but it’s the founding family, not investors, who’ll set the agenda.

ABB’s premium rating looks vulnerable

24 Jul 2014

The Swiss engineer has already hit investors twice this year with a profit warning and an earnings miss. ABB says its 2014 margin target remains safe. But the enduring problems in its power systems unit pose a risk. Slippage would remove a key support for the shares.

Philips lighting split is a bright idea

30 Jun 2014

The Dutch conglomerate is restructuring again, moving high-powered LEDs and car lights into a standalone unit with 1.4 bln euros in sales. The business is fast-growing and would benefit from outside capital. Stepping out of the parent’s shadow should help.

Exelon is overpaying, even with the sandbagging

30 Apr 2014

Relative to similar deals, the U.S. utility is low-balling the projected savings from its $6.8 bln Pepco purchase. Modesty won’t fool regulators. They’ll demand a cut through lower electric bills. Even assuming more realistic synergies won’t justify a $1.1 bln premium.

ARM offers a non-alarming mini-disappointment

23 Apr 2014

Shares in the $23 bln UK microchip designer fell 4 pct after royalty revenue for using its blueprints barely grew. But licences are strong, smartphone demand growth could return soon, and the “internet of things” is promising. The company’s high-margin model is still holding up. 

Philips can still shine despite darker outlook

22 Apr 2014

The $30 bln electronics group’s flatlining revenue in Q1 has dimmed near-term growth hopes. Troubles with traditional lighting and healthcare scanners could persist. But the basic investment case for Philips looks sound, especially if weaker emerging markets rebound. 

Huawei handset success requires foreign push

1 Apr 2014

Consumer devices like smartphones accounted for only a quarter of sales last year, but generated half the Chinese group’s revenue growth. As Huawei’s traditional telecom equipment business runs into headwinds outside China, success in handsets can help pick up the slack.

Uniting UK mobile and electrical stores rings true

24 Feb 2014

A $6 bln merger is being discussed by Carphone Warehouse and Dixons, Britain’s largest mobile and electrical retailers. Investors quickly added $350 mln to the duo’s stock valuations. That reflects real potential to cut costs, cross-sell, and win better terms from hardware giants. 

Sony jumps onto Japan’s taboo-breaking wagon

6 Feb 2014

The troubled Japanese giant is finally getting serious about restructuring. It’s selling its ailing PC business to a local buyout fund and is separating out its loss-making TV unit. The moves are a welcome sign that Sony is willing to shrink in its bid to return to health.

Edward Hadas: Apple, banking and taxpayer subsidy

5 Feb 2014

Why does Apple have such high profit? Why does the banking system have a tendency to fail? The answer is the same: taxpayers subsidise business risks but the rewards aren’t fairly distributed.

Time for Siemens’ turnaround CEO to deliver

3 Jan 2014

Joe Kaeser is now piloting Europe’s biggest engineer. He has easy profit targets ahead, and some obvious levers to pull: disbanding a sprawling unit, ditching trains and avoiding big M&A. But a stock rally means these moves are largely priced in. So any setbacks could hurt.

China web giants take the fight offline in 2014

17 Dec 2013

Chinese tech firms are leaving their comfort zones to win consumers. TV shows, logistics and electronics are all part of the arsenal for companies like Tencent, Baidu and Alibaba. These forays are as disruptive as they are risky, particularly for the sector’s high margins.

Alibaba dips cautious toe into logistics

10 Dec 2013

Investing in white-goods maker Haier is a new direction for the e-commerce group, whose high margins come partly from eschewing hard assets like unsold goods, trucks and warehouses. But e-commerce hinges on timely delivery – which explains Alibaba stepping down from its pedestal.

Sony stumble gives Loeb headache and opportunity

1 Nov 2013

The Japanese group’s quarterly loss knocked 12 pct off its market value. Poor results from both the entertainment and electronics arms suggest there’s limited upside in the spinoff proposed by activist Dan Loeb. However, it could allow him to push for more radical restructuring.

One idea Samsung could safely copy from Apple

28 Oct 2013

The Korean giant’s $40 bln cash pile is almost as big relative to its market cap as that of its U.S. arch-rival. The hoard allows Samsung to keep investing when others can’t. But with almost two years of capex in reserve, it can afford to mimic Apple and give more to investors.

ARM’s smartphone buying blip may be shortlived

22 Oct 2013

The UK microchip designer set new records for licences sold and free cashflow in its third quarter. Yet ARM shares fell. That is down to softening demand for smartphones. But with ARM blueprints now in all manner of devices, it has the strength to rebalance its revenue streams.

Philips can only go so far with cost-cutting

21 Oct 2013

The Dutch electronics group trebled Q3 profit after slashing costs. The shares are up 25 pct since June. Yet revenue growth was tepid. The biggest of Philips’ three businesses, healthcare, looks the most infirm. Peers have done better and Obamacare reforms could pile on the pain.

Tokyo Electron takeover is no template for Japan

3 Oct 2013

Applied Materials wooed its smaller rival with an all-stock merger and shared governance. Other buyers may try a similar approach to tempt Japanese partners to the altar. But a large chunk of Tokyo Electron’s stock is already held overseas. Other targets lack that advantage.

Sharp’s $1.7 bln share sale won’t restore its edge

26 Sep 2013

The Japanese electronic firm’s offering of new shares worth 40 percent of its market value will reduce net debt by 16 percent. That will shore up but not repair its balance sheet. With Sharp’s turnaround still far from proven, investors should expect it to return for more.

Abenomics opens a capital window for Japan Inc.

12 Sep 2013

Sharp and Mitsubishi Motors are weighing share issues to help repair troubled balance sheets. With the weak yen boosting earnings, equity capital market volumes have returned to near pre-Fukushima levels. Though investors remain cautious, other troubled companies may follow.