Tag Archives: merger and acquisition

Twitter and Facebook can make a MEGA-merger

CEO Jack Dorsey in both Twitter and Square, announced today that Twitter will lay off about 336 employees, which is about 8 percent of Twitters workforce. The engineering team will be downsized in a restructuring plan.

Twitter has a lot of obstacles, and CEO Jack Dorsey is hired to solve them all. He is still holding down his second job as CEO of Square in addition to his «full-time» job in Twitter. The biggest challenge is to reach the mass audience.

Jack Dorsey said in an e-mail today that the engineering team will become «smaller and nimbler», while other groups will be «streamlined».

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The new restructuring plan will cost about $10 to $20 million. Cofounder Jack Dorsey said that this is necessary to make Twitter grow. I`m always very sceptical when I hear companies cut to make growth. Is this the beginning of the end?

What I think is; do we really need Twitter? Many of the Twitter users are the same as Facebook users, but there is a huge difference between them. Isn`t it easier for people to be on one platform then two with the same product?

The same can be said about marketers. They are actually spending twice as much money on much of the same target. All of the MAU`s at Twitter is also Facebook users. Today Twitter`s users are more professional than all the users at Facebook, but Facebook is a similar social-media platform with much of the same products.

Twitter and Facebook are both in the same market which is both based on micro-blogging. What Twitter need now is to build a new product and reach the masses. If not, it would be a great idea to merge with Facebook. What about a MEGA-merger?

Investors sent Twitter`s stock right up on the hiring of the new permanent CEO Jack Dorsey, but is it good news to cut employees right after the end of Q3? Last quarter didn`t show any cost side of the income statement, and now we are seeing that their cost is a problem.

Twitter`s Q3 street consensus on revenue is $559 million, and have nearly 4,000 employees. Facebook`s Q2 revenue is eight times higher and have «only» 11,000 employees. Twitter`s stock has plummeted from about $70 to about $30. Facebook`s stock has skyrocketed. From about $20 to about $95.

Facebook`s market cap is 262,32 Billion while Twitter`s market cap is «only» 21,10 Billion. In comparison; Apple Inc`s market cap is 640,58 Billion.

Many of Twitter`s MAU`s are world leaders, celebrities and more. We can see millions of Tweets everyday. Everything from live commentary to cultural memes to name a few. Very good, but is it enough in the long run? I think some investors has a mixed feeling.

Twitter`s third-quarter earnings will be in focus, and their user growth is one of the most important factors to look at. The red flag for Twitter`s user growth has been hold high before. Their user base grew 12 percent YoY, but just 0,07 percent sequentially. MAU was up 15 percent, but only 2,6 percent sequentially.

This is not the growth you expect from a micro-blogging, SMS based, social media company like Twitter.

User growth is what I will look for in Twitter`s Q3 report on Tuesday, October 27, 2015.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

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One of the biggest tech acquisitions ever

I wrote about M&A deals in December 2013 and December 2014. I predicted that the M&A deals would increase and Michael Dell know as many other CEO`s that this is the right time to acquire and merge. Dell announced it will acquire EMC Corporation today.

This is one of the biggest tech acquisitions ever! The biggest acquisition is the disastrous AOLTime Warner merger in 2000. An event I remember very good. The Dell/EMC deal is the second largest.

Michael Dell and his company Dell Inc revealed monday that they will acquire EMC Corporation for about $67 billion in cash and stock. Chairman Michael Dell is now creating a very powerful powerhouse enterprise company.

I don`t think HP like this deal at all, because the demand is still declining while the competition is very tough. With this acquisition, Dell will try to build a tech giant with a wider product lineup and get a profitable edge over their competitors.

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EMC Corp operates in the Data Storage Devices industry, and it operates in three segments: EMC Information Infrastructure, Pivotal and Vmare Virtual Infrastructure. If you are a EMC shareholder, you will get $24,05 per share in cash as well as tracking stock linked to EMC`s interest in VMware.

You will get about 0,111 shares of new VMware tracking stock per share, and the deal will close next year.

VMware declined over 9 percent on news on the Dell/EMC deal, but it’s up again from start Monday. At the same time, VMware pre-announced it expected Q3 revenue of $1,672 billion, which is up +10 percent Y/Y, with a EPS of $1,02. Total revenue is expected to come in at only 3 percent. Look out for full Q3 results on October 20.

The company can become a takeover target for larger tech companies in the future, and VMware can be candy for HP, Oracle or Cisco Systems Inc to name a few.

EMC rose over 9 percent in pre-market trading Monday in New York. EMC has pre-announced it expected Q3 revenue of $6,05 billion to $6,08 billion, with a EPS of $0,43, which is below consensus of $6,25 billion and $0,45.

Dell had stakes in four different firms in 1999 and 2000, but have since then acquired plenty of different tech companies. They had a stake in Fast Search & Transfer with a value of $25,200,000 in January 31, 2000.

Most of the companies that they have acquired is U.S companies and this is the way Dell has expanded. The acquisition today is the biggest ever, and Dell has about 111,000 employees with $57,2 billion in sales last year. EMC is a leader in cloud-based storage and pulled in$24,4 billion in 2014.

The Dell and EMC deal will make them one of the world`s largest privately held tech company.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

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M&A (merger and acquisition)

As I wrote about earlier, you must look for small cap stocks in the Russell 2000 now. It is risky, but high risk means high gain, and you have to spend money you can afford to lose. So why small cap stocks?

You see, America is for sale and that is for the highest bidder. What I am talking about is really good companies out there. The companies that no one is talking about. The cheap one. The innovative one.

There is a lot of money out there waiting for good investments. Many of the great companies are searching for the right small cap stocks. Why? They simply want to thrive by purchasing growth.

Take a look at Google. For example, they expanded and bought Youtube.com. Everyone is afraid of Google. They are a great example of a model for what a media company needs to be in order to be competitive in the future.

Cisco was smart enough to buy companies with great talents instead of developing them themselves. Cisco have done this over 140 times since 1993. They are infusing new ideas and new ways of thinking by doing it like this. It makes them strong and competitive. Google seems to do exactly the same thing and that makes them stay ahead of a rapidly changing competitive landscape on internet.

The really biggest day in e-commerce in history is Cyber Monday. $10 billion was spent from about 70 million online shoppers. That`s an increase of 18%. 30% of the purchases came from a mobile device. 80% of those came from an Iphone or iPad. unbelievable!

And here is the catch: Social sites generated only around 1% of the e-commerce sales on that day. An increase of only 2%. So, E-commerce is the real big thing. It`s business. 17% of the sales came from Email. That`s pretty nice.

Facebook, Twitter, Instagram and Pinterest are popular sites and people still think that social media is a marketing must. The numbers are falling and the money is not in here. Social media is better for branding, networking and community building, but direct sales is better other ways than social media. Will we see any M&A in this sector in 2014? Are those big ones looking for small caps?

This is a tremendous investment opportunity and you as an aggressive investor need to play on it. But how? I expect next year to be a takeover boom! You have probably seen it before and know that nothing jolts a stock higher than an unsolicited takeover offer. The stock prices skyrocket on rumors like that.

Who say no to a single-day return of 50% or more? I have many new and exciting companies on the radar, but I can`t tell you what stocks it is. It is a lot of research behind the work of finding the best stocks, so this is what I get paid for.

But I can tell what sectors you should look for. It is technology and healthcare. I expect a lot of action in those sectors next year. I really look forward to 2014. It`s gonna be a funny year. So, I am still bullish!

News today: PPI m/m at 8.30am.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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