Post Tagged with: "mergers"

Privacy and the ubiquity of embedded technology

Privacy and the ubiquity of embedded technology

Yesterday, Google announced that it would buy privately-held Nest Labs for $3.2 billion. This was Google’s second largest acquisition ever. Nest is a smart thermostat and smoke alarm-maker which promises to give Google a leg up in the fast expanding home automation market. But the acquisition also highlights the degree to which communications technology is now embedded in ordinary devices. The benefit is convenience. The risk is privacy.

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Excess cash on the balance sheet is wealth destruction

Excess cash on the balance sheet is wealth destruction

Many of the largest technology companies are making so much money that they are rapidly accumulating cash on their balance sheets. While on could argue that this cash should be stripped off the balance sheet for valuation purposes, I would argue that the cash is worth less than face value because having excess cash on the balance sheet is an invitation to wealth-destroying acquisitions. The excess cash should be returned to shareholders as quickly as possible in the form of dividends or share buybacks to prevent such an outcome.

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The Race for Energy Resources

The Race for Energy Resources

Scarcity is a powerful force and it leaves those in control of limited resources wielding great power. We think a scarcity of uranium will increase Russia’s power; control over some of the last big, easy oil deposits has earned Saudi Arabia great global influence. Petronas’ deal with Progress is a sign that shale gas could generate similar prowess for North America, and is a strong reminder that the global race for resources will provide some with money and power while leaving others in the dust.

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Facebook Snaps a $1-Billion Photo

Facebook Snaps a $1-Billion Photo

“What made Instagram worth $1 billion to Facebook?”

When asked this question recently, I responded with an immediate, “Nothing.”

I’m not usually so terse or emphatic with my answers, as any longtime reader knows. But in this case, there really was nothing inherently valuable inside Instagram that made them worth the unbelievable sum Facebook agreed to pay. Yet they did it anyway. Clearly, there’s something missing from a traditional valuation analysis here.

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News Links: The ECB’s back-door bail-out for Italy, Spain, Belgium, and… France?

News Links: The ECB’s back-door bail-out for Italy, Spain, Belgium, and… France?

News links for 22 December 2011 including stories on the tech world, Europe, and the ECB

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News Links: Corzine Rebuffed Internal Warnings on Risks at MF Global

News Links: Corzine Rebuffed Internal Warnings on Risks at MF Global

Financial news links for 6 December 2011 featuring stories on MF Global, Facebook, class divides and retail sales.

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A Battle for Oil Production Is Brewing

A Battle for Oil Production Is Brewing

With big oil’s bank accounts full to the brim with cash, the stage is set for some significant acquisition activity… or, to put it another way, for a battle to buy producing assets. There are quite a number of contestants in the battle – big oil companies are not only competing against each other to sweep up good assets but also against the national oil companies of developing, energy-hungry nations like China, South Korea, and India. Oil demands are rising in these nations so quickly that just to cover expected annual demand increases those three countries would have to jointly spend $30 billion on acquisitions each year.

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The Creeping Eurozone Credit Crunch

The Creeping Eurozone Credit Crunch

Here’s a very informative chart via Morgan Stanley showing the deterioration in the Eurozone’s key credit indicators. Banks will no doubt sell assets, at least in part, as a way to meet their required capital targets.

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It’s official: Spain following Japanese example of propping up zombie banks

It’s official: Spain following Japanese example of propping up zombie banks

Moody’s decision to place Popular’s ratings on review for possible downgrade is driven by our view that the combined entity emerging after the integration with Pastor is likely to have a weaker credit profile than Popular’s standalone credit strength.

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Why is a bank that failed the stress tests in Spain getting bought at a 31% premium?

Why is a bank that failed the stress tests in Spain getting bought at a 31% premium?

I don’t follow the Spanish banking sector well enough to know what hidden value Banco Pastor has but I find it curious that it is the subject of a takeover bid at a 31% premium by Spain’s fifth largest bank, Banco Popular.

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What’s Up With Micron?

What’s Up With Micron?

Smells like Kentucky Fried Takeout to us. Yes, we’re talking our book, but for good reason. Nevertheless, keeping both hands on the ripcord.

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Margin Call coming this fall

Margin Call coming this fall

Timing couldn’t be more perfect, no? Maybe we get a bottom in equities on the release date. Go here to the movie’s official website.

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