Software

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.

Revolut’s desired $40 bln price tag is a stretch

24 Jun 2024

The UK fintech group wants to sell $500 mln of shares at a valuation far above its last level. To get to $40 bln, investors need to assume it’s like payment giant Adyen. With a lower margin and discounts warranted in other areas, Revolut’s value looks more like $20 bln.

The ragged end of private equity is unspooling

21 Jun 2024

Carlyle’s $7 bln purchase of Veritas was part of a multi-year software buyout frenzy, reaching over $100 bln in deals in 2022. Fueled by cheap debt, the bill is now due with rates up and results down, sparking a fight with creditors including feisty Elliott. It won’t be the last.

A warning from history about large-cap stock booms

21 Jun 2024

Five decades ago, shares in a handful of large companies like IBM and McDonald’s propelled the US stock market to new highs before collapsing. As investors pile into tech giants led by $3.3 trln Nvidia, the earlier period may be instructive for those who believe history rhymes.

Autodesk left a door ajar for its pushy investor

18 Jun 2024

Despite a plum niche developing software for architects, the $50 bln firm’s performance has sagged. Rabble-rouser Starboard Value has cookie-cutter fixes. But the company’s hand is weakened by poor disclosure that invites gripes about activists’ favorite target: executive pay.

Saudi expands strategic toolbox with Lenovo deal

29 May 2024

A PIF unit is the sole investor in the laptop maker’s $2 bln convertible bond. It pays no interest and can’t be swapped for stock until 2027. The real value to the kingdom is Lenovo’s pledge to build a new factory and regional HQ there to bolster Riyadh’s manufacturing goals.

CEO pay is hidden factor in US relisting trend

29 May 2024

Plumbing supplier Ferguson almost doubled its boss’s compensation after moving to New York, while $55 bln CRH is reviewing its remuneration after switching too. It’s not something boards like to talk about. But investors might support US-style pay if it attracts the best talent.

Snowflake’s growth story is worryingly typical

23 May 2024

The $55 bln software firm’s revenue is growing rapidly, partly because of AI initiatives, and investors are rewarding it. But marketing costs and stock-based pay are high, and semiconductors costs are rising. As tech newbies show, excitement based on sales growth often thaws.