Software

2024’s biggest US software LBO has some good omens

17 Sep 2024

Blackstone and Vista Equity Partners are close to an $8 bln deal for Smartsheet that would probably tap loans backed by revenue, not cash flow. That has bitten Vista before. But with style drift more contained and peers like Thoma Bravo eyeing IPOs, past might not be prologue.

ASML faces bigger problems than China

16 Sep 2024

Fears of US tech export curbs have pummelled the $320 bln Dutch firm’s shares. A longer-term worry is that the growth of AI leads to new technologies, and less need for ASML’s machines that make chips smaller and efficient. That, more than trade wars, may hurt its rich valuation.

Fuji Soft’s $4 bln sale needs a rethink

9 Sep 2024

Shares of the IT software specialist are trading 7% above the price of an agreed takeover offer from buyout firm KKR, and above a higher price its rival sponsor Bain is dangling at the target. After wrestling with a sale, the Japanese company has left too much value on the table.

Telegram’s route to profitability looks dubious

3 Sep 2024

The troubled app’s CEO Pavel Durov runs a lossmaking enterprise. The easiest path to profitability is to echo Facebook, but content moderation costs would further hit Telegram’s finances. The main alternative is to be a messaging app, but WhatsApp implies that’s hard to monetise.

Murdoch’s UK property gambit has a price ceiling

2 Sep 2024

Australian property listings site REA Group is eyeing $6 bln UK peer Rightmove. The News Corp-backed suitor can use cash and higher-valued shares to pay a 30% premium. Beyond that, Rupert Murdoch’s outfit might struggle to combine a successful bid with keeping him in control.

OpenAI’s mooted $100 bln value is relatively sober

29 Aug 2024

The ChatGPT maker may be worth just 16% more in its next share sale than in February’s funding round, according to reports. That looks modest, given AI darling Nvidia’s shares have nearly doubled. Senior departures and competition from rivals like Elon Musk justify a modest bump.

New EU antitrust tsar has better tools, harder job

27 Aug 2024

The European Union will soon have a new competition commissioner. Margrethe Vestager’s replacement has greater scope to go after Big Tech and Chinese subsidies. But he or she will also have to defend the single market from the assault of EU members’ national industrial policies.

Apple begins delicate dance with Tencent in China

15 Aug 2024

The iPhone-maker wants a share of revenue from games played on the $450 bln tech giant's WeChat platform. For Apple boss Tim Cook, it's a lucrative opportunity as handset sales cool. Yet if the US company pushes too hard, it may jeopardise its hard-earned appeal in China.

Google is a monopoly, long live Google

5 Aug 2024

Alphabet’s search giant illegally wields its might over rivals, a US judge has ruled. The decision also carefully stays within classic antitrust boundaries. Given how tricky disentangling the $2 trln company’s technology would be, a market-shaking penalty will be hard to impose.

UMG pays steep price for platform addiction

25 Jul 2024

The $42 bln music group’s shares sank by more than 25% on Thursday, falling below their 2021 IPO. Lower-than-expected growth in subscription revenues underlines the company’s painful dependence on pricing decisions made by big players like Amazon or Apple.

Google’s third-place cloud business is a winner

23 Jul 2024

Parent Alphabet tripled its quarterly operating income at its IT service division. It still lags in market share. Yet the $2 trln giant has an advantage learning from the mistakes of larger rival Microsoft while bigger peer Amazon illuminates the potential profit ahead.

Cyber meltdown points to downsides of efficiency

19 Jul 2024

A software update by $83 bln CrowdStrike grounded flights and disrupted financial markets. That’s possible because businesses work with a small number of providers, seeking lower costs. It supports rich tech valuations, but also heightens the risks of a catastrophic failure.

Buyout barons’ IPO castoffs trade may be repeated

16 Jul 2024

Clayton Dubilier & Rice’s $2.6 bln offer for software firm Exclusive Networks would see it scoop up a stock that has drifted since a 2021 listing. Majority-owner Permira would get a handy way to cut exposure. A long list of struggling initial offerings mean more deals may follow.

Wiz deal could help Alphabet nail down the cloud

15 Jul 2024

At $23 bln, the cybersecurity firm would be the Google parent’s biggest acquisition, one antitrust regulators are likely to hate. It’s expensive too. But Alphabet is an underdog in cloud, where security is a big differentiator. Even with the risk of failure, the deal makes sense.

Smaller tech grapples with end of Big Tech put

12 Jul 2024

Software developers are trading at premium valuations, fueled at least in part by the idea that larger rivals will scoop them up. Alphabet’s decision not to buy $25 bln HubSpot, and greater antitrust resistance, indicates such outcomes are less assured. More disappointment looms.

Data centre boom reveals AI hype’s physical limits

4 Jul 2024

The investor frenzy over artificial intelligence assumes there will be enough infrastructure to support apps like ChatGPT. But a $1 trln rush to build data centres faces planning restrictions and energy constraints. That will limit processing power and push up costs for users.

MicroStrategy is hedge funds’ favorite meme stock

2 Jul 2024

The $26 bln firm’s shares have leapt on a bitcoin buying binge, funded by bonds that can turn into stock. Unlike GameStop’s ragtag punters, MicroStrategy depends on hedge funds such as Citadel piling in. Thing is, they rely less on a rising share price than a wildly volatile one.

Nvidia customer’s valuation voodoo tests AI mania

2 Jul 2024

Germany’s $1.4 bln Northern Data has access to the US giant’s sought-after chips and makes money by renting them out. It may re-list parts of the business on the Nasdaq. If investors accept a mooted $10-16 bln price tag, it’s a sign the market has truly lost touch with reality.

The economics of AI points to value of good data

28 Jun 2024

Investors chasing the artificial intelligence boom have pushed up the value of $3 trln chip supplier Nvidia and big cloud computing firms. Yet AI models have dubious benefits unless they are trained on reliable information. Moreover, high-value data makes them cheaper to develop.

Olympic Games can withstand Atos farce

26 Jun 2024

The French firm managing the Paris sporting event’s IT backbone is close to bankruptcy. It may find 800 mln euros of short-term financing from President Macron’s government and loans even after creditors ditched restructuring talks. But its future after the Games is less certain.