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Tech

Capital Calls: JetBlue makes winning Spirit hurt

6 Jun 2022

Concise views on global finance: The hostile bidder has offered cash up-front for Spirit shareholders, which could force current suitor Frontier to make costly concessions.

Tech convertible boom was a tax on the gullible

3 Jun 2022

Fast-growing firms including Affirm, DraftKings and MicroStrategy issued $100 bln of zero-coupon convertible debt over the past couple of years. Holders get no interest, taking instead an option that’s now in many cases near worthless. Some may not even recoup their principal.

Capital Calls: Microsoft micromanages tech jitters

2 Jun 2022

Concise views on global finance: A 1% revenue shortfall because of a strong dollar normally isn’t that important. Microsoft’s warning reflects how nervous tech investors have become.

Venture royalty bets $4.5 bln on self-disruption

26 May 2022

Andreessen Horowitz’s new crypto fund comes less than a year after its last one. The former backer of Facebook and Airbnb reckons blockchain-based giants will conquer the web by rewarding users. If true, that should also mean less money for venture capitalists.

Shopify’s governance revamp is so 2021

26 May 2022

Shareholders are being asked to give Tobi Lütke the ability to keep his voting power even if his ownership stake falls. That might have been palatable at the end of last year, when Shopify’s shares were worth five times as much as they are now. Now it just adds insult to injury.

Unicorns’ hard times point to M&A stampede

25 May 2022

Of the 2,300 private firms with valuations above $1 bln in the past decade, one-third managed to go public. Volatile markets now make that door inaccessible. As investors seek proof in their paths to profit, combining forces with rivals is the least-bad option.

Alibaba’s overseas growth push faces European test

25 May 2022

The $223 bln Chinese e-commerce giant hopes to offset sluggish growth at home by expanding in the region via its Southeast Asian offshoot, Lazada. But with a European market share of less than 5%, and entrenched rivals like Amazon, Alibaba may struggle to justify the investment.

Xiaomi epitomises risks of supply chain buffering

20 May 2022

The Chinese handset maker and peers weathered component shortages by stockpiling. Xiaomi's shrinking quarterly sales of $11 bln, and a net loss, make clear how the country’s Covid-19 lockdowns are hurting consumers. A reckoning of bloated inventories and falling demand awaits.

Deal odds in the face of market pain

19 May 2022

Market pain is changing the math for arbitrageurs, as targets' shares may drop further if mergers fail. A Breakingviews calculator shows the odds of a deal going through. Run the numbers here.

Hong Kong can afford slow road to digital currency

19 May 2022

There’s some FOMO in the local e-HKD effort. Central banks elsewhere have better reasons to act faster, including low rates of financial inclusion and less use of physical cash. Hong Kong would do well to think longer about privacy concerns and to learn from other experiments.

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.