Software

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.

EU’s $5 bln fine is the least of Google’s worries

18 Jul 2018

The Alphabet unit can absorb another record European antitrust penalty. A companion order requiring it to stop forcing handset makers to pre-install its Google search app and Chrome browser may cause more damage – and curb the firm from expanding in areas like self-driving cars.

Broadcom’s new M&A strategy has a bug

11 Jul 2018

The $105 bln chipmaker’s prolific dealmaking has supercharged growth. But its size, and the torpedoing of its Qualcomm bid, left it bereft of natural targets. Expanding into software by buying CA brings new opportunities - and substantially increases the risks of pitfalls.

Micro Focus $2.5 bln sale amplifies growth problem

2 Jul 2018

The British tech group’s disposal of an open-source software unit is helping its share price, which halved in March. Yet the source of its problems, a troubled former HP division, now accounts for more of the group’s revenue. A tricky turnaround has become even harder to execute.

China dims chances to shine in Asia’s cloud

27 Jun 2018

Demand is rising for remote data services across the region, including from proliferating startups. Chinese vendors such as Alibaba are best placed to challenge the likes of Amazon. Beijing's push for "internet sovereignty," though, may impede expansion, even by local champions.

Rockwell dabbles in financial overengineering

11 Jun 2018

Paying $1 bln for a non-controlling stake in a rival software company seems odd. PTC doesn’t need the cash. Such shareholdings in peers can have logic, as some drugmakers have shown. The bar is high, though, especially after Rockwell last year turned down a takeover at a premium.

Apple’s value can chug well past $1 trillion

5 Jun 2018

The tech giant is close to being the first to pass that threshold in market capitalization, as Breakingviews predicted seven years ago. Growth has slowed but customers remain loyal and today’s valuation is far from stretched. Apple’s focus on data privacy may help it get there.

GitHub deal displays softer side of Microsoft

4 Jun 2018

The $775 bln IT giant is buying GitHub, the most popular site for developing, sharing and talking about software, for $7.5 bln. The old Microsoft was about extinguishing competition – boss Satya Nadella seems more interested in persuading developers to use his services.

Wall Street’s software roll-up contains a glitch

30 May 2018

Private equity is on a tech binge. KKR’s $8.5 bln purchase of BMC from rivals led by Bain and Elliott sets the firm up for more deals. Enterprise software is sticky, so this play can mint money. But with copycats lining up, the strategy’s popularity will eventually kill returns.

Adobe pays princely sum to add to virtual realm

22 May 2018

Graphics design and video production may be the $120 bln software juggernaut’s crown jewels, but Adobe wants to expand in the lucrative land of helping companies go digital. Magento could be key to unlocking faster growth. Yet at 11 times trailing sales, it’s a stiff price.

Closing tech’s gender gap will take decades

17 May 2018

One in three employees at Google, Facebook and Apple is a woman. Even if just over half of new hires were female, it would take up to 15 years to achieve a balanced workforce, a Breakingviews calculator shows. If Silicon Valley is serious about parity, a bolder target is needed.

Symantec leaves investors suffering from silence

11 May 2018

The maker of anti-virus software lost a third of its value after it revealed an audit investigation and then skipped its earnings Q&A entirely. Not talking about the inquiry is understandable. But ruling all topics off limits encourages shareholders to indulge their worst fears.

Xiaomi puts collective spin on tech IPO vows

25 Apr 2018

The Chinese firm says if net margins on its phones and gadgets ever top 5 pct, users will keep the spoils. Ahead of an IPO at a mooted value of up to $100 bln, this is a stunt worthy of Silicon Valley. It tells investors to focus on apps, and consumers that Xiaomi has their back.