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Technology Stock Roundup: Acquisitions, Open Sourcing & Yahoo

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Last week, NXP NXPI closed its acquisition of Freescale, Facebook FB open sourced its AI hardware, Microsoft MSFT announced Cortana for iOS, Android and Cyanogen and the Yahoo YHOO saga continued.

Digging into the details:

NXP Closes Freescale Acquisition

NXP Semiconductors' $11.86 billion acquisition of Freescale Semiconductor closed last week. Including the debt taken over, the purchase price is around $16.7 billion. The acquisition that was first announced in March this year for cash and NXP stock creates an automotive and IoT chip powerhouse with annual revenue in excess of $10 billion and the promise of growing much faster than the market.

The strength on the auto side is particularly worth mentioning, given NXP's capabilities in communication chips for inter-car and other communication and Freescale's capabilities in driver assistance systems. In IoT, the new company targets home automation, wearable devices, health monitors, security and payments systems. These are very attractive areas of the chip market at the moment given the increasing consumption of electronics in cars, the driverless car takeoff on the horizon and the push toward IoT devices.

Facebook Open Sources Big Sur

In the battle to develop artificial intelligence (AI), Facebook has shot the latest arrow. The company has tied with NVIDIA to release a hardware reference design called Big Sur that engineers in any corner of the world can use to develop its AI framework.

Needless to say, this increases the attraction of the Facebook system as a development platform that can attract talent to further feed the system. Facebook claims that the systems are optimized for thermal and power efficiency while the eight NVIDIA Tesla M40 GPUs it is based on makes it super-fast. Taiwanese company Quanta is making the servers instead of traditional U.S. companies, thus lowering overall cost of development.

Microsoft Cortana for iOS, Android & Cyanogen

Microsoft has been promising a great Windows experience irrespective of the device you're using. But that promise was only partially fulfilled since its personal assistant Cortana had been available on Windows devices alone. PAs generally gain popularity on mobile devices because they're always with you and it's also difficult to toggle between apps and sites. Since Microsoft's share in that market is next to nil, the world at large doesn't really know how good she is. She responds to your "Hey Cortana" to open apps, set reminders and also answer basic questions on desktops, laptops, tablets and smartphones.

But that's only on Windows 10 devices. In Cyanogen (especially on the OnePlus One phone, which it runs), she can do almost as much. But when you're using an Android device, she won't be able to respond while you're inside an app and in iOS, she won't be able to respond to "Hey Cortana" either. She can still make notes of your requirements and itinerary to alert you but can be only be activated when you open the app.

This is an interesting development for the Microsoft-Google relationship in particular, given that Microsoft has been funding Cyanogen while keeping the relationship extremely low-key as there is common ground in the company's stated goal of "taking Android away from Google." The Cyanogen OS is built on a stock version of Android and the company has hundreds of developers working on the project. If Microsoft buys the company/OS later on, it could strengthen Microsoft's position in mobile while taking significant share from Google.

Yahoo Sale Update: More of the Same

Yahoo CEO Marissa Mayer will have trouble celebrating the birth of her baby girls as the company she's headed for the last few years is being taken apart. No one really knows whether it's the media business that will go first, that is, news, sports, finance, style, celebrity content, movies, beauty, politics, health, autos and crafts, or whether it will be restructured, hacked or sold off, or in what order.

Verizon may be interested in the business for the sheer number of users Yahoo has. Its CFO was quoted as saying "If we see there is a strategic fit and it makes sense for our shareholders and we can return value, I mean we'll look at it, but at this point it's way too premature to talk about that one."

Next is Yahoo Japan, which is an attractive investment and may be sold off relatively easy and former Google executive Nikesh Arora, who is now President and COO may be interested.

Alibaba will for sure be interested in buying back its own shares but is unlikely to agree to an attractive price. The company has thrown out the idea of buying Yahoo saying that it continues to buy its favorite shares (referring to its share buyback program under which it naturally buys shares when they don't do so good).

But it may not be all doom and gloom for the Yahoo CEO. By the time she gets back from her three weeks' leave, she might very well be invited to continue running the show, wherever it goes.

Company Last 4 Days Last 6 Months YTD
AAPL -4.91% -11.00% +2.54%
FB -3.81% +26.58% +30.26%
YHOO -5.73% -21.66% -35.35%
GOOGL -3.69% +38.07% +45.82%
MSFT -3.31% +18.21% +13.75%
INTC -1.89% +9.49% -7.42%
CSCO -4.79% -7.48% -5.38%

Other stories you might have missed -

Corporate

Alphabet Spins Off Life Sciences Division : Alphabet GOOGL is spinning off its Life Sciences unit as Verily with the goal of making robots that can assist in surgical operations. The new company was formed in collaboration with Johnson & Johnson to make use of its considerable experience in medical devices. The Alphabet company will be providing the intelligence based on its machine learning and advanced image processing capabilities. Both companies are contributing human and other resources as well as intellectual property.

Google Finds Space in Shanghai FTZ : Pengji Information Technology (Shanghai) Ltd is a 5 million Yuan Google Ireland Holdings-owned company registered in Dec 2014 to carry on "IT development, computer software development, and computer systems integration." Google was previously banned from web page searching and email services in China, but these two are reportedly included in Pengji's business scope. The FTZ allows companies engaged in app store businesses to own more than 50% of the shares with the balance held by the government. Outside the FTZ, companies are limited to 50%.

Google Fiber Targets LA, Chicago

EA Shares React To Battlefront Price Cut

Amazon Buying Up Thousands of Trailers : Amazon AMZN has been buying up a large number of trailers that bear its own branding to transport goods between its fulfillment centers. The trucks that pull the trailers will continue to be supplied by third parties and Amazon will continue to use the U.S. Postal Service, UPS and Fedex for deliveries. T

he idea seems to be greater control of the buying experience or greater efficiency in transportation/inventory management. Another alternative, as WSJ pointed out could be to have the vehicles operate as mini-distribution centers in parking lots and other areas to help pickups or speed deliveries. Amazon's related patent filed last year was approved this September.

Legal/Regulatory

Microsoft Settles with Shareholders : After Microsoft violated an EU mandate to ship PCs with a Browser Choice Screen, the company had to pay a $732 million fine as well as $7.3 million in the plaintiffs' lawyer's fees. Microsoft executives was then sued by shareholders. In settlement, Microsoft has agreed to spend $42.5 million over the next five years to create an Antitrust Compliance Office that will take care of antitrust and compliance matters.

New Technology/Products

Apple TV Update

Microsoft Windows 10 Lumia for Europe : Microsoft is shipping its budget Lumia 550 to Europe. This is one of the cheapest Windows 10 devices, offering 4G LTE, a 1.1 GHz quad core processor from Qualcomm, 1GB memory and 8GB storage, all for just $139. Microsoft's phone announcements don't attract a lot of attention, since the phone hasn't been able to wrest more than a couple of points of market share from Apple AAPL and Google-powered devices despite multiple initiatives by management. Windows 10 is supposed to be a game changer given its promise of seamless integration between desktops and mobile devices.

Microsoft to Open Source Part of Browser : Microsoft is open sourcing a part of the software stack (JIT, garbage collector, parser, interpreter and various application programming interfaces) that runs its JavaScript Engine called Chakra. The source code will be published on GitHub next month. The ChakraCore (part being open sourced), runs its Edge browser and also Cortana, Outlook.com, Azure DocumentDB and TypeScript.

Microsoft now wants it to go further and is seeking outside partners to help build the platform. The company claims that Chakra offers better support for the latest version of JavaScript and hopes it will make a mark in IoT and server side applications. Intel, AMD and NodeSource have reportedly expressed willingness to collaborate.

M&A and Collaborations

Microsoft Invests in SnapLogic : Microsoft and Silver Lake have invested $37.5 million in SnapLogic. The company's Platform as a Service (PaaS) connects a company's data and devices, whether housed in on-premise computing hardware, IoT devices or in the cloud. This allows the company to get the most out of its data, thus driving efficiency in its cloud deployments. The money will be used to spur growth including through international expansion. Other investors include Andreessen Horowitz, Ignition Partners and Triangle Peak Partners.

Some Numbers

Apple Could Sell 21 Million Watches : Asymco analyst Horace Dediu has reportedly said that Apple is on track to sell 21 million Watches in calendar year 2015. The analyst says that at $400 a piece, this means revenues of 8.4 billion. Even if the revenue numbers fall short (because of significant discounts for the holiday season), selling 21 million devices into a market that managed just 6.8 million units last year is a big deal.

YouTube Appears to Gain Share in U.S. : Sandvine, which bases its estimates on peak-hour bandwidth use, says that while Netflix remains by far the leading platform on fixed-line connections with 37% downstream share, YouTube is a distant second with around 18%. YouTube has gained around 4 percentage points over the past year and Amazon has also grown slightly to over 3%. Facebook and iTunes have less than 3% share.

Microsoft Offers : The Microsoft Store is targeting big sales this year. The company has ensured this with rock-bottom prices beating other retailers like Wal-Mart and even Amazon. It is now selling an Xbox bundle for $299.99 and the Xbox already looks attractive with backward compatibility and a number of new games this year.

Both Call of Duty: Black Ops III (Wal-mart is selling this for $49.88) and Star Wars Battlefront (no wonder Gamestop had to cut prices!) are going for just $29.99 each. It's also offering a humongous discount on some Dell hardware. For instance, the 8GB Dell Inspiron 15.6-inch laptop with Intel i5 is selling for just $449 (Amazon is selling the $749 device for $525).

Google Play Music Launches Family Plan : Google Play Music has finally plugged a gaping hole in its services. The company has now launched a family plan for $14.99 for up to 6 members, which is the same deal that Apple offers, but better than Spotify's offer of $14.99 for two, and an additional $5 for each additional member.

Google Chromebooks in Classrooms : A study by Futuresource Consulting as revealed by CNBC says that Chromebooks have jumped from less than 1% of U.S. K-12 devices bought by schools and school districts in 2012 to 53% in the third quarter of 2015. Ease of use and easy parental controls have facilitated the quick adoption despite the fact that Google has had to deal with privacy issues that saw it sign the Student Privacy Pledge. It also ran into trouble with the Electronic Frontier Foundation for its alleged violation but doesn't prima facie appear to be guilty.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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