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Technology

Broadcom ups difficulty level for Qualcomm owners

5 Feb 2018

The chipmaker has raised its hostile bid to more than $120 bln. The merger is no more likely to pass antitrust review unscathed, though. And because Qualcomm’s owners would get roughly a quarter of the combined company, Broadcom’s overpayment becomes a serious risk for them.

Sequoia joins the frothy fund club

5 Feb 2018

The early backer of Google and Apple could raise $8 bln to fund startups that are close to floating, says Reuters. It’s a hot market but a largely unproven strategy. Huge sums being invested by Japan’s SoftBank are probably inflating prices too. Investors may do better elsewhere.

Ola puts SoftBank in back seat with overseas drive

5 Feb 2018

The Indian ride-hailing outfit wants a slice of the action in Australia. The intrusion into one of Uber’s strongholds will irk SoftBank, which is a big investor in both firms. The Japanese group’s minority stakes clearly are not enough to stop fights between taxi startups.

BT belatedly remembers it’s a telecom business

2 Feb 2018

Under new chair Jan du Plessis, the former UK telephone monopoly seems more focused on network investment than costly TV forays. It is building more fibre internet lines and may declare a truce with rival Sky on soccer rights. That should please both regulators and shareholders.

Sony rolls opening credits on Turnaround 2

2 Feb 2018

Finance chief Kenichiro Yoshida is a good choice to lead the $62 bln group. The co-architect of Sony's overhaul can continue the aggressive revamp that has lined shareholders' pockets. Handsets and big shareholdings are two of the Japanese group's last big problem areas.

Airbnb wisely tidies up before guests arrive

1 Feb 2018

The home-rental app ruled out going public in 2018 after its finance chief abruptly quit. With positive cash flows, boss Brian Chesky doesn’t need to rush. The naming of a chief operating officer also shows Airbnb has learned from some of its Silicon Valley peers’ mistakes.

Amazon’s growth risks irritating users

1 Feb 2018

The nearly $700 bln internet retailer turned in another remarkable holiday quarter. Advertising, third-party sales and private-label goods are some of the company’s fastest-expanding – and most profitable – businesses. They aren’t, however, necessarily great for Amazon’s image.

Alphabet is stuck at the letter G

1 Feb 2018

The holding company of Google was created to safeguard against conventionality and let moonshot ideas, like self-driving cars, flourish. Almost three years in, it’s basically still just Google. Which means, in turn, that the A in Alphabet stands mainly for advertising.

Apple’s less-is-more vibe bodes well for profit

1 Feb 2018

Apple sold fewer iPhones for more money in the last quarter, raising fears that the company is losing its innovation edge. But that’s OK – persuading customers to pay more arguably requires as much genius as getting people to adopt the technology in the first place.

Google offers Aramco unlikely route to IPO heaven

1 Feb 2018

The Saudi oil producer is in talks with the search engine’s owner to create a tech hub in the kingdom, says the WSJ. There could be a secondary benefit. If investors valued Aramco the way they do Alphabet, the $2 trln valuation Riyadh wants from a future IPO would be a shoo-in.

NXP has Qualcomm over a barrel

31 Jan 2018

The larger chipmaker’s stock is close to Broadcom’s $105 bln hostile offer price. It might be because investors are warming to Qualcomm’s stand-alone worth. But that vision fades unless Qualcomm closes its own $38 bln deal for NXP. The danger now is raising its bid too much.

Ericsson merits a dysfunctionality discount

31 Jan 2018

The Swedish telecoms-kit maker reported an operating loss for the fifth consecutive quarter and sales fell 10 percent in 2017. Boss Borje Ekholm promises an improvement this year but the core mobile market is shrinking. A valuation premium to Nordic peer Nokia is hard to justify.

Samsung stock split is an illusory value boost

31 Jan 2018

A plan to split its stock 50-fold, unveiled alongside detailed results, helped push the tech giant’s shares up sharply. That is puzzling: this won’t do much except entice a few more small investors. Issues like shareholder returns and corporate restructuring matter far more.

U.S. healthcare bloat faces new triple threat

30 Jan 2018

Amazon, Berkshire Hathaway and JPMorgan are getting together to cut medical costs. Details are few and obstacles many, but they bring relevant skills and a lot of employees to the mix. A multibillion-dollar hit to health-sector stocks shows the shakiness of the status quo.

Philips still waiting for valuation health-check

30 Jan 2018

The Dutch group has shed its consumer electronics legacy and now earns almost all its income from health technology. Low profitability means CEO Frans van Houten has yet to be rewarded with a valuation worthy of the sector. Full-year results for 2017 at least show he’s on track.

Chinese angels keep Wanda’s IPO dream alive

30 Jan 2018

A Tencent-led group will pay $5 bln for a stake in the indebted conglomerate's property arm. The money buys boss Wang Jianlin precious time to execute a relisting in Shanghai. This new alliance could help clear regulatory hurdles too. What the allies get out of it is less clear.

Chipmaker M&A exhibits increasingly fuzzy logic

29 Jan 2018

Amid a rash of big deals, Japanese firm Renesas may offer close to $20 bln for U.S. rival Maxim, CNBC reported. Combining the two could generate big savings – but Renesas would need to cut 100 pct of Maxim’s operating expenses to justify that price. That’s called overpayment.

Dell has no time for fantasy finance

29 Jan 2018

The U.S. tech giant needs cash to pay taxes, reduce debt and let investors exit. Reversing into its $53 bln subsidiary VMware is too complex, while an IPO would be financially unattractive because of pricey past acquisitions. There are simpler, more logical ways to raise cash.

Super-voting stock returns a split-ticket

26 Jan 2018

Senior officials from Credit Suisse, BlackRock, Bain Capital and PCCW Media squared off about Hong Kong moving to open the door to dual-class share structures. It'll invite more listings, they told a Breakingviews Predictions event, but the implications are many and varied.