NVIDIA/ARM Deal Off, Peloton CEO Steps Down

Tuesday, February 8, 2022

As expected, Q4 earnings season takes its proper place among news headlines for the market ahead of today’s open. But first, today an announcement was made by Japanese holding company Softbank and Silicon Valley tech giant NVIDIA NVDA that the latter’s acquisition of Softbank entity Arm Software is no more.

What originally was going to be a $40 billion buy rose on escalating valuation at the graphics procession unit (GPU) maker, to as high as $80 billion. NVIDIA cited regulatory issues as the reason the company was no longer pursuing its largest-ever purchase. Softbank now intends to take Arm public, with an IPO currently targeted for March 2023.

Another company recently cited as a takeout candidate, Peloton PTON reported lower-than-expected results in its fiscal Q2 report: a loss of -$1.39 per share was a deeper cut than the -$1.18 in the Zacks consensus. Revenues of $1.13 billion came in -0.47% below estimates. Yet shares are up nearly 3% in today’s pre-market, after having tumbled -16.8% year to date.

The reason behind this was not to do with any particular suitor to come in and purchase the at-home exercise company, but with a shakeup of its board, including the stepping down of CEO John Foley, to be replaced by Barry McCarthy. Cutting 2800 jobs, 20% of the company’s workforce, will help the company’s goals of reducing costs, driving growth, profits and free cash flow. Foley, who stays on as Executive Chair, admitted the company under his leadership :”expanded too rapidly.”

Pfizer PFE shares are trading down -4.75% at this hour on its Q4 earnings report. The company had been priced for perfection with its Zacks Rank #1 (Strong Buy) and Value-Growth-Momentum grade of A, but misses on the top and bottom lines. While the Big Pharma staple reports expects sales of $32 billion in Covid vaccinations and $22 billion for its anti-viral Covid drug, questions remain about the rest of the company’s catalogue, as well as the future of the Covid pandemic, itself.

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