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Tech

Market rout throws off math for open deals

18 May 2022

Unlike Twitter, whose shares dived on Elon Musk’s waning enthusiasm for his $44 bln offer, other stocks pending a deal are down on little news. Market pain changes the math for arbitrageurs as target shares may drop further if mergers fail. A Breakingviews calculator shows how.

Tencent gives China bulls little to run with

18 May 2022

The $450 bln video-games giant said sales stalled in the first quarter, below expectations. Despite signs Beijing may rein in tech crackdowns, the government’s Covid-19 lockdowns are creating more uncertainty. Investors hoping to ride out the volatility will get no such reprieve.

Tencent Music sets sombre tone for China tech

17 May 2022

Quarterly sales slumped 15% to $1 bln thanks to the triple whammy of a slowing economy, more competition and new regulations. It'll be a familiar refrain for the Spotify-like group's $430 bln parent and peers. Focusing on profitability over growth should hit the right notes.

Fed has a spreading inflation problem

11 May 2022

U.S. consumer prices rose at an annual rate of 8.3% in April. While that was lower than the four-decade high seen a month earlier, food costs leapt by the most since 1981 and shelter grew more expensive. Broadening price pressures mean there’s no respite for Chair Jerome Powell.

Twitter board is dangling over hot water

10 May 2022

The social media company’s directors did not conduct an auction to seek rival offers to Elon Musk’s $44 bln bid, and some have overlapping interests. That leaves them open to accusations of conflicts of interest. Whether the deal goes ahead or not, the board looks exposed.

Toronto can teach aspiring tech hubs some lessons

9 May 2022

Many places try to replicate aspects of Silicon Valley. Favorable immigration rules and cheaper labor costs have made the Canadian city a strong contender. Some of these advantages may not endure. But success in luring giants like Meta Platforms means that may not matter for now.

Uber’s CEO has right idea, wrong valuation

9 May 2022

Boss Dara Khosrowshahi said he’s focused on cutting costs to up free cash flow. That sounds like a great idea. The trouble is Uber’s $50 billion valuation is too high even assuming better margins. And it’s harder to square if top line growth slows when expenses are slashed.

Switch may be high-water mark for data center M&A

3 May 2022

The company, in which activist Elliott has invested, could attract a bid from Brookfield. Even after 2021’s landmark deals, a market cap of nearly $8 bln would make Switch a pricey target. With tech valuations under pressure, this might be the top for data-center dealmaking.

China’s ZTE answers the call on Huawei’s crisis

3 May 2022

Fresh off five years of U.S. probation, the $16 bln telecom-equipment maker is growing sales and improving margins as American sanctions hurt its larger rival. An expanding 5G rollout leaves additional market share up for grabs. Its discounted valuation is poised to be dialed up.

Apple collects Big Tech quarterly earnings Oscar

28 Apr 2022

The $2.6 trln iPhone maker’s financial report for January to March showed it had a winning season compared to its Big Tech fellows. CEO Tim Cook’s business got less of a Covid boost than, say, Amazon, and had early supply-chain jams. Now it’s more than catching up.

Amazon takes hit from foggy outlook

28 Apr 2022

The e-commerce giant shed nearly $140 bln in market value after it forecast sluggish sales growth. The pandemic was good for Amazon and other online retailers. Now, while cloud services remain a bright spot, shipping, wage costs and macroeconomic factors are stumbling blocks.

Musk has at least three Twitter problems to fix

28 Apr 2022

In the first quarter, the $37 bln network’s expenses rose twice as fast as revenue. Users were up 16%, but Twitter admitted it had mistakenly puffed those up in the past. Plus, still it hasn’t proven it can be regularly profitable. That all takes attention Musk may not have.

South Korea Inc heaps added pressure on Samsung

28 Apr 2022

The Galaxy maker’s 51% rise in quarterly operating profit, to $11 bln, only underscores its dependence on memory chips. Despite its ambitions in autos, biotech and other areas, peers Hyundai, SK and LG are moving faster to capitalise on new markets. Idle cash is a growing risk.

Elon Musk probably won’t buy Twitter

27 Apr 2022

Sure, the Tesla boss will be on the hook for at least $1 bln if he walks away from the $44 bln deal. But shares in his electric-vehicle firm could rise by more than he loses. The risks to Musk’s China business, regulatory pushback, and Musk’s general flightiness further lengthen the odds.

Big Tech’s growth story faces a one-two punch

26 Apr 2022

Inflation means advertisers and subscription clients have less money to spend at places like Google and Microsoft. Meanwhile, a tight labor market makes hiring more difficult and expensive. Without new business to sell or people to sell it, tech companies lose their shine.

Musk Twitter bid becomes less virtual, more risky

21 Apr 2022

The Tesla CEO says he’ll put up almost half the $46.5 bln needed to buy the social network and borrow $13 bln against his stock in the carmaker. Banks will lend $13 bln. If all goes well, he makes a private equity-style return. Twitter’s poor cash flow means lots could go wrong.

Twitter’s scarce suitors, Didi’s New York exit

21 Apr 2022

As Elon Musk dangles a $41 billion offer, Breakingviews columnists discuss whether anybody will end up buying the social network in this Viewsroom podcast. Plus, the Chinese ride-hailing firm cancels its U.S. listing less than a year after arriving, leaving shareholders stranded.

Indonesia’s EV dream gets $15 bln spark of reality

20 Apr 2022

South Korea’s LGES, China’s CATL and partners plan to build comprehensive battery supply chains in the country. That’ll please Jakarta, whose bold electrification goals need industry buy-in. With supply chains stressed, it’s a well-timed boost for the wannabe production hub.

Didi’s peers will pay price of New York debacle

19 Apr 2022

The Chinese ride-hailing group is planning a U.S. exit less than a year after arriving. But shareholders, who have seen the stock fall 85% since the disastrous IPO, have no guarantee of an exit afterwards. The corporate wreck will taint other mainland firms eyeing the Big Board.