Software

Tencent-backed Sea makes better second impression

7 Mar 2019

The $7.8 bln tech outfit just sold more stock at a higher price than it did in a shoddy late 2017 IPO. A video game hit and success in an Indonesian e-commerce battle against Alibaba’s Lazada have won over sceptics. Some $1.4 bln of fresh capital can help keep the momentum going.

Software M&A makes LBO shops click on club deals

4 Feb 2019

A group led by Hellman & Friedman is paying more than 30 times EBITDA for its $11 bln buyout of Ultimate Software. Private equity is targeting the tech cloud. But such lofty valuations require big equity checks few can or want to write. That means teaming up, despite the risks.

Microsoft floats above tech downdraft

30 Jan 2019

The software giant, at some $820 bln vying to be the most valuable company, racked up another quarter of strong growth and profit as more business moved to the cloud. The shift has years to go and could accelerate in a recession. Microsoft’s lesser regulatory worries are a bonus.

Slack is the tech everybody likes but no one needs

17 Jan 2019

That’s one problem for the messaging service as it gets ready to go public. It’s popular, but not a must-have for companies. Another issue is its current $7 bln private-market valuation. Based on other high-flying software firms, it’s only worth just over half that amount.

Welcome the new AI investment overlords

27 Dec 2018

Man vs. machine will replace active vs. passive as the dominant battle in the $80 trln money-management war. Pressure to cut costs keeps mounting while artificial intelligence gets better at systematic trading, crunching data and identifying trends. Logic favors the computers.

Three roads lead to three $830 bln-ish values

6 Dec 2018

Apple, Microsoft and Amazon.com are neck-and-neck as the biggest companies by market cap. The valuations of the mature iPhone cash cow, enterprise-software giant and e-commerce behemoth may be similar, but they reflect the rock-paper-scissors opportunities and risks each faces.

Fraud case reminds that bad M&A is a team effort

30 Nov 2018

U.S. prosecutors are trying to prove Autonomy CEO Mike Lynch deceived buyer HP in an $11 bln deal gone wrong. Such things tend to be a team effort. While fuzzy accounting rules that fostered this dispute are less of an issue now, the forces behind disastrous deals are evergreen.

Dell puts $2 bln price tag on VMware resistance

15 Nov 2018

The PC maker’s second attempt to go public by buying out its subsidiary’s tracking stock should work. A higher valuation, extra cash and a board seat address skeptics’ main concerns, and have won over Elliott and others. The rewards of acceptance outweigh the risks of voting no.

SAP-Qualtrics deal may be mutually good experience

12 Nov 2018

Rather than go public the U.S. customer and employee feedback outfit is selling to the German giant for $8 bln, over $3 bln more than IPO expectations. Though it casts aside the Qualtrics founders’ desire for control, it could still be a smart long-term choice for both companies.

Symantec LBO offers more potential than threat

6 Nov 2018

A possible buyout of the troubled $14 bln software firm by private-equity shop Thoma Bravo checks many boxes. The valuation isn’t stretched, cost cuts are possible, and cybersecurity is booming. Symantec’s history of internal troubles and rising competition could be potholes.

Cloud-software IPO deserves an equivocal “yes”

6 Nov 2018

Qualtrics wants a valuation of more than $4 bln in its upcoming offering. The firm is larger, more profitable and growing faster than recently listed rival SurveyMonkey. But its undemocratic, double-barreled supervoting stock limiting outsiders’ say should give investors pause.

SoftBank mobile IPO confronts Alibaba history

5 Nov 2018

Masayoshi Son’s $85 bln group quintupled profit in its latest half-year results, and the telecom unit did well ahead of a planned market debut. Listing it could help narrow a huge 60 pct discount to where analysts value SoftBank. The Alibaba flotation hasn’t helped much, though.

Apple’s pricey strategy carries risk

1 Nov 2018

Making its new iPhones more expensive helped boost the tech giant’s revenue 20 percent in the latest quarter. Now Tim Cook is applying the same formula to the company’s Macs, iPads and accessories. But a warning that growth may slow suggests even Apple fans have price limits.

Microsoft’s blandness is its beauty

24 Oct 2018

The software giant is checking all the right boxes. Quarterly revenue grew 19 pct and net income is healthy. The $830 bln firm is even managing to avoid data privacy issues that are dogging peers with similar market values. Credit boss Satya Nadella for keeping things staid.

SAP margin crunch comes with a silver lining

18 Oct 2018

The 120 bln euro software group’s results disappointed, with its operating margin declining. Yet that’s because its cloud computing unit is outgrowing the older, more profitable business. If that continues it will mean more stable revenues, faster growth, and a higher valuation.

Finance makes Apple and Google forced friends

17 Oct 2018

Steve Jobs once wanted to destroy Google for copying the iPhone. The company he founded is now dependent on the search engine and its parent Alphabet for around 10 pct of its profit. The growth of mobile search and the market for secondhand phones will bind the two even tighter.

Amazon gender-diversity fail shows limits of tech

10 Oct 2018

The $900 bln e-commerce giant scrapped a résumé-reviewing computer program after discovering it was prejudiced against women. Algorithms and machine learning hold promise, but are limited by programmers’ own biases. Weeding out such regressive traits requires human intervention.

Holding: Dell deal’s high hurdles include the law

26 Sep 2018

The PC maker risks getting sued by owners of VMware tracking stock if it pushes through a $22 bln share swap. Yet recent Delaware decisions about the rights of similar shares offer a novel defense. The planned transaction could test legal limits as well as investor patience.

Microsoft’s rising cash may burn hole in pocket

19 Sep 2018

The software giant raised its dividend by a modest 9.5 pct, virtually assuring the company will increase the $58 bln hoard on its balance sheet. Why the AAA-rated outfit needs so much dry powder isn’t clear – but it may tempt boss Satya Nadella into extravagant dealmaking.

Apple’s new innovation: tap fear as well as greed

12 Sep 2018

The $1 trillion firm’s new watches can detect falls and heart conditions, making them a useful gift for grandma, as well as hypochondriacs everywhere. Meanwhile, aesthetic appeal and better cameras should be enough to convince many users to pay up for an improved phone.