Software

Chinese AI listing concentrates risk factors

26 Aug 2019

Artificial intelligence startup Megvii has filed for a Hong Kong IPO even as protests rock the city. Controversial facial recognition technology and scrutiny from Washington may alarm investors, as could plans for super voting stock. To fundraise now looks brash, or rushed.

Smartphones may be as good as it gets for Xiaomi

20 Aug 2019

Revenue at the Chinese group's handset unit rose a tad despite shrinking demand for such devices. But a push into internet services has been disappointing: Boss Lei Jun is struggling to wring more money out of a growing user base. Xiaomi’s premium valuation looks too generous.

Dell cleans house further with pivot on Pivotal

16 Aug 2019

Michael Dell’s dealings have left investors mistrustful and owning bits of three overlapping listed firms. Having one, the $58 bln VMware, buy another, Pivotal Software, simplifies things at a reasonable price. The lack of direct benefit for Dell himself may be a selling point.

Huawei desperately wants for friends like Facebook

14 Aug 2019

The handset maker has rolled out its own operating system in case Washington blocks its access to Google’s Android. The hope is that foreign apps will create compatible versions. Huawei is dangling big incentives for developers but financial ones may not be sufficient.

Tencent may be Nintendo’s best console accessory

26 Jul 2019

The video-games giants are partnering to launch the Japanese group's devices in China. The benefits of deeper ties appear irresistible. Nintendo can tap Tencent’s mobile expertise and user base, while coveted characters like Super Mario can boost Tencent's reach outside China.

Elliott’s $1.3 bln SAP bet requires patience

18 Jul 2019

Shares in Europe’s biggest tech company, under pressure from the U.S. activist, fell 7% after sales and operating margins disappointed investors. SAP’s cost-cutting and cloud business targets still look achievable – eventually. But Elliott may need to stick around for a while.

Old buyouts surf software’s frothy wave

11 Jul 2019

McAfee may return to public markets three years after TPG bought it from chipmaker Intel. Private equity ownership and M&A have buffed the firm up, even as PC anti-virus software has matured. But the idea McAfee’s value has doubled also rests on voracious demand for tech stocks.

Dassault’s drug data wager relies on heady growth

12 Jun 2019

The French software group is buying U.S. peer Medidata for $5.8 bln. The deal boosts Dassault’s exposure to the hot trend of using big data to develop and test drugs. But likely modest synergies and the rich price mean investors will have to wait years for the deal to pay off.

Salesforce visualizes M&A benefits, market doesn’t

10 Jun 2019

The $125 bln software firm is paying $15 bln for Tableau. Founder Marc Benioff says the combination will allow sales reps to see data better, and that makes sense. Wall Street, though, is looking askance at a premium price that comes in at 11 times Tableau’s forecast revenue.

Cloud stocks have drifted too high

6 Jun 2019

Software as a service deserves some of its hype. But high valuations for companies like Veeva and Shopify can make missteps into disasters. Look at the plunging share prices of Cloudera and Pivotal. It doesn’t help that scrutiny of big tech has dulled the prospect of M&A exits.

Google’s hidden costs give Beijing sticker shock

22 May 2019

Reaching for sharper trade weapons, Washington has clamped down on Huawei's access to the U.S. giant's software. Chinese handset makers selling abroad rely on Google tech: the free Android system powers their phones. A crackdown leaves much of a $175 bln export market vulnerable.

Symantec board leaves company exposed

9 May 2019

CEO Greg Clark is leaving the $14 bln cybersecurity firm with no successor. That’s poor planning. But directors, including an activist and two buyout barons, should have been better prepared after an audit probe and a slew of senior departures. Now Symantec may be an M&A target.

Apple’s old age beats Google’s adolescence

30 Apr 2019

The iPhone maker reported a 5 pct drop in revenue as consumers pocket its marquee product longer. Boss Tim Cook’s handouts to investors provide a nice cushion as he searches for the next big thing. Alphabet’s Google has higher expectations and less room for missing the mark.

Slack needs a channel for valuation skeptics

29 Apr 2019

The email disruptor’s revenue jumped 82 pct in the year to January. But losses held steady, leaving profit far away. Private trading in March may imply a price tag of $15 bln or so and Slack could expect even more from its direct listing. Investors may want to chat before buying.

Elliott cloud-computing bet rests on dumb markets

24 Apr 2019

The activist group revealed a $1.4 billion stake in German software giant SAP, and backed its management. The fund’s own analysis implies the stock could double, but looks out of kilter with analysts’ forecasts. The bold call means SAP needs to move quickly to keep Elliott sweet.

Online-video IPO pits greed against China fears

10 Apr 2019

Zoom may be worth more than $9 billion when it floats thanks to its astonishing growth – and, rare for a 2019 tech IPO, its profitability. Sky-high valuation multiples make the firm’s China-centered R&D effort financially appealing, but there’s significant political risk.

KKR plays weaker cards well Down Under

3 Apr 2019

The stakes got high in its $1.4 bln buyout of Australian software developer MYOB after a U.S. hedge fund pressed for a better price. It made a reasonable case holding a potential blocking stake, but KKR stood pat and the pushy investor folded. Seasoned gamblers are hard to bluff.

Apple Card puts customer first, Goldman second

26 Mar 2019

The remarkable thing about the iPhone maker’s new status symbol isn’t its titanium sheen, the cash back or promises to protect user data. It’s that partner Goldman Sachs has eschewed many features that make the credit card business so lucrative for issuers. That’s no bad thing.

Holding: Time to put M&A cash cow out to pasture

26 Mar 2019

So-called appraisal cases have rewarded shareholders and deterred dodgy deals. But judges’ reluctance to set share prices, an expert-witness scandal and other trends have made them less lucrative. The HP-Aruba merger gives Delaware’s top court a chance to end the tactic.

BlackRock sees tech as an antidote to fee pressure

22 Mar 2019

The world’s largest investment shop is paying $1.3 bln for an alternative-asset management software firm. Boss Larry Fink gains heft in a booming private-equity market and bolsters a growing technology business. It’s a smart attempt to counteract price wars in stocks and bonds.