Software

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.

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.