With the PC market being increasingly commoditized, those firms without economies of scale are seeing their PC divisions are more of a liability than an asset. After being spun off from Sony nearly 3 years ago, VAIO entered talks with Fujitsu and Toshiba to merge their PC divisions together. Combined, the 3 would have challenged current Japanese market leader NEC Lenovo. Unfortunately, it appears that the talks have broken down for now.
The main breakdown in the negotiations was due to disagreements on how to merge assets. Japan Industrial Partners, the majority owner of VAIO, wanted to cut as much fat as possible during the merger. Fujitec on the other hand, wanted to keep as many of their current assets as possible and wanted to minimize restructuring. Toshiba seemed to be in no rush to close a deal even as their finances plunged even more into the red.
As the situation continues to deteriorate for the 3 firms, they may soon be back at the table to hammer out a deal. Combined, they would have over 30% of the domestic and just over 3% of the global market. That just might be enough to save them from disappearing. On their own though, they are unlikely to stand a chance of lasting any sustained period of time.
The semiconductor industry is a tough area to operate in and it is a dog-eat-dog world, and now it looks like Marvell Technology Group could be the next to be swallowed by a bigger dog on the market. According to an article in the New York Post, the chip maker could be up for sale and Broadcom/Avago could be the possible buyer.
This isn’t the first time that we’ve heard of Avago’s interest in Marvell. Last July several news outlets reported that Avago was interested in the purchase, but was holding their bid until the Broadcom and Avago merger was completed.
It hasn’t gone all that good for Marvell lately despite them making some great chips that we see all the time here in the office when we review products. For example, last month they reached a settlement with Carnegie Mellon University for $750 million and they have also just been through an audit for alleged fraud. They were however cleared in the audit and there wasn’t found any evidence of wrongdoing or accounting fraud as the allegations said.
Still, the stock has been on a steady decline as the semiconductor business generally has been going down and stockholders demand that the company cuts costs. After the stock dove about 40 percent of the past year, it doesn’t come as a big surprise that the stockholders demand some action.
Whether Broadcom (AVGO) will make an official bid or not is something time will tell and I’m sure that there will be a lot of details to iron out between the two before they’ll reach an agreement, if they do at all. There is however also some doubt on whether such a merger could result in an antitrust scrutiny as some of the areas of the two overlap, such as Wi-Fi, Bluetooth, and Ethernet switching chips, among others.
After being spun off from Sony two years ago, it looks like VAIO is planning to expand its PC operations. Despite the doom and gloom in the PC market, VAIO is reportedly planning a merger with the PC divisions of Toshiba and Fujitec, two other major Japanese PC OEMs. In fact, Japan Industrial Partners Inc, the owners of VAIO, are expected to hold the largest stake in the new firm and expects the consolidation will streamline the operation. The new company would rival NEC Lenovo in the Japanese market with a third of marketshare.
For Toshiba and Fujitec, this presents a good opportunity for them to get out of a market which has not much for them in the last while. Toshiba, in particular, is already trying to get rid of their less profitable divisions already and focus on NAND. By merging, the new as yet to be named firm has a will be able to leverage it’s now stronger domestic presence and make a bid for the international market as a whole, something VAIO has been trying to do.
In the current race to the bottom, there are only a few major players left like ASUS, HP, Dell, Lenovo, Samsung and Acer have any significant presence and some of them aren’t doing quite well right now. Windows 10 has largely failed to help spur new growth and there seems to be little relief in sight. If the continued survival of a Japanese PC maker means a merger, it will happen sooner or later.
Despite being one of the largest firms in the smartphone SoC market, Qualcomm has been seen some trouble recently. Just a few months ago, the firm had considered splitting into separate licencing and manufacturing segments. While that idea silently died a quickly deserved death, it seems like Wall Street still isn’t too happy with the firm’s performance. According to Market Realist, some Wall Street analysts are suggesting that the best course of action would be a merger with Intel, and failing that, one with AMD.
Qualcomm’s troubles stem from a lack of brand recognition and the market failure of the Snapdragon 810. Due to this, the company has seen it’s profits and revenue fall significantly. A merger with Intel would fix some of the problems. First of all, Qualcomm would be able to get access to Intel’s first class fabs. Secondly, Intel brings along its data centre and enterprise connections, a highly lucrative market. For Intel, Qualcomm would provide in-roads into the mobile market, an area Intel ahs had trouble breaking into. Qualcomm would also ensure that Intel is making best use of their expensive fabs.
Unfortunately for Wall Street though, a merger is highly unlikely. First of all, the merger would bring a hoard of anti-trust issues, it being one of the largest tech mergers ever and bringing together the dominant players of their respective markets. The fundamental nature of the struggle of ARM vs x86 also stands in the way, meaning the merged firm would likely have to keep both, negating any benefits of moving into new markets. The ARM side would be stuck in mobile as that is what most customers are using while the desktop/enterprise will continue to use x86 as they are used to that as well. The synergies on paper simply don’t play out in real life.
The only sensible merger would be with AMD, though that would be more of acquisition of the ailing red team. Qualcomm does have enough cash to settle AMD’s debts and give a cash boost but it probably wouldn’t be good for a struggling firm to start throwing money around right about now. AMD does bring the desktop and data centre/enterprise experience though AMD’s marketshare is pretty poor right now. However, the downsides of the ARM/x86 struggle and lack of fabs still remain problems. It remains to be seen if this remains a crazy Wall Street thought exercise or will it actually end up happening.
Western Digital is one of the leading factors in traditional storage, both for consumers and enterprises alike, but a lot of the future will be in solid state drives and they naturally don’t want to be left out of that race. Western Digital isn’t entirely new to the solid state area and they already have products that utilize NAND. That position should be strengthened even more now that they have acquired SanDisk. The purchase is composed of both cash and stock.
“The offer values SanDisk common stock at $86.50 per share or a total equity value of approximately $19 billion, using a five-day volume weighted average price ending on October 20, 2015 of $79.60 per share of Western Digital common stock. If the previously announced investment in Western Digital by Unisplendour Corporation Limited closes prior to this acquisition, Western Digital will pay $85.10 per share in cash and 0.0176 shares of Western Digital common stock per share of SanDisk common stock; and if the Unisplendour transaction has not closed or has been terminated, $67.50 in cash and 0.2387 shares of Western Digital common stock per share of SanDisk common stock. The transaction has been approved by the boards of directors of both companies.”
At around 19 billion, this is certainly no small deal. Western Digital will gain a company with 27-years of experience in some of the best and most impressive NAND products and create a stable future for the company where they can compete on all fronts, including the NVMe based drives that we’d all like to have these days. With 15 thousand combined patents between them, they also have a strong foundry against the fierce competition in the storage market.
The transaction is still subject to approval by SanDisk shareholders, but both boards of directors in the two companies have agreed. The deal is expected to get finalized in the third quarter of 2016.
Chip giant Intel has agreed a deal to buy PLD (programmable logic device) manufacturer Altera for $16.7 billion, consolidating the company’s presence in data centres. Intel will pay $54 a share, all-cash, for Altera at a premium of 11% over its closing share price on Friday.
The Intel/Altera merger comes in the wake of rising manufacturing costs, with Intel intent on making its profitable semiconductor business – worth $300 billion globally – yield even greater returns. The purchase follows last week’s record-breaking deal that saw Avago Technologies buy Broadcom Corp. for $37 billion. The two deals now make 2015 a phenomenal year for the semiconductor market.
“Management teams are looking at their business and predicting little growth going forward,” Gus Richard, an analyst at Northland Securities Inc., said. “The M&A wave is a function of them trying to drive earning growth. Intel’s purchase of Altera is one of the few strategic moves that is being made currently.”
“The acquisition will couple Intel’s leading-edge products and manufacturing process with Altera’s leading field-programmable gate array (FPGA) technology,” an Intel statement reads. “The combination is expected to enable new classes of products that meet customer needs in the data center and Internet of Things market segments.”
Following the announcement, stock in Altera rose by 6.2% to $51.86 a share, while Intel fell by 1.3% to $34.
Thank you Bloomberg for providing us with this information.
The deal has been finalised and the British operation of Telefónica, O2, has been sold to Three. The people behind Three, Hutchison Whampoa have signed the final deal and O2 is being sold for £10.25 billion (€14 billion).
The sales price is divided into £9.25 billion in cash and another £1 billion “once the cumulative cash flow of the combined company in the UK has reached an agreed threshold”.
The next step will most likely be the removal of the O2 brand as the two companies get merged and Three will get a lot more customers and infrastructure at their disposal. While it removes one competitor from the market, it strengthens another. It will be interesting to see how this plays out in the long run.
A collection of disparate groups, ranging from the Parents Television Council to the Writers Guild of America, have formed a coalition called StopMegaComcast to kill the proposed merger between Comcast and Time Warner Cable.
“A competitive and diverse media and technology marketplace is fundamental to the health of our economy and our democracy,” a statement the StopMegaComcast website reads. “The Comcast-TWC merger threatens competition, runs counter to our antitrust and communications laws and should be rejected by federal regulators. This much power concentrated in the hands of one company would be frightening even for the most trustworthy of companies. And Comcast is definitely not that.”
Other members of StopMegaComcast include Dish Network, Public Knowledge, the Consumer Federation of America.
Microsoft and Nokia are known to have a very good company relationship as Nokia is Microsoft’s number one partner when it comes to shifting Windows based smartphones. According to The Wall Street Journal Microsoft is looking to buy Nokia’s handset business.
Apparently though the discussions were going well until the two companies couldn’t agree on the price and were both concerned about Nokia’s declining market position. According to the WSJ Microsoft refused to comment on the speculation but Nokia said the following:
“We have a deep partnership with Microsoft, and it is not uncommon for Nokia and Microsoft to meet on a regular basis,” a Nokia spokeswoman said
Despite the success of the partnership between the two companies, in the overall market Microsoft’s Windows Phone is struggling to gain traction with just 3.3% OS market share for Q1 of 2013 and Nokia has just 2.8% of market share for handsets in Q1 of 2013.
It isn’t known how much the value of the deal could be but with Nokia’s U.S stock market value at more than $14 billion and with their mobile phone revenue at $40.15 billion for 2012 it seems unlikely Nokia would be willing to part ways with their mobile segment for a low price. Surely if they did sell it off this spell the end of Nokia altogether, or of Nokia as we know them today.