Yet another week where M&A dominates the news.
Verizon bought another company (Fleetmatics), SalesForce purchased Quip, and there are rumors that HPE might be up for sale (all of it or some of it). IBM is showing interest in purchasing point of sale company Revel.
IBM is also actually responsible for some technology news this week. Their health AI systems are starting to target cancer symptoms as a means of early detection. They also maybe created an artificial neuron for super computers.
IBM
- IBM IC detects cancer before symptoms appear
“The societal impact of this research is that it could enable physicians to detect cancer early…when there are more possibilities of being cured,” Stolovitzky said. “We wanted this research to be in the area of cancer and also the area of detecting DNA and viruses like Zika. Everything reduces down to the same thing: being able to have a small and affordable diagnostic tool that can detect minute quantities of biomarker particles that tell physicians something about a person’s health.”scale of biology
- IBM is reportedly in talks to buy point-of-sale software firm Revel Systems
Bloomberg reports IBM (IBM) is in early talks to acquire Revel Systems, provider of an iPad-based point-of-sale (POS) hardware and software system for merchants.
Revel competes with Square, PayPal (PYPL) , NCR (NCR) and others in the iPad POS market; its customers include Cinnabon, Chobani, and Popeyes. It has 750 employees, and was valued at more than $500 million in a $13.5 million 2015 funding round.
https://www.thestreet.com/story/13660304/1/verizon-makes-a-telematics-acquisition-ibm-reportedly-mulls-a-retail-acquisition.html
Is IBM Setting Up To Buy Revel Systems?With a Revel acquisition, IBM could theoretically refill a hole in its product line that has existed since the firm sold its point-of-sale business to Toshiba for $800 million in 2012. Revel, on the other hand, could possibly find itself with a soft exit from a market where funding rounds are getting fewer and further between.
http://www.pymnts.com/news/point-of-sale/2016/ibm-acquire-revel-rumors/
- IBM creates first-ever artificial neurons that behave like the real thing
IBM researchers in Switzerland have created an artificial neuron that behaves just like the real thing. For the first time in history, artificial phase-change neurons have been grouped together (in a population of 500 synthesized in a lab) to process a neurological signal in more or less the same way that biological neurons transmit messages. They can be made exceptionally small and are similar in power and energy usage to biological neurons, and can even produce results with random variations, also just like biological neurons.
http://inhabitat.com/ibm-creates-first-ever-artificial-neurons-that-behave-like-the-real-thing/
- IBM’s Wager on Open Source Is Still Paying Off
“It became apparent that open source could be the de facto standards we needed to be the engine to go out and drive things,” Moore said in his keynote at ApacheCon. “[The contributions] were bets; we didn’t know how this was going to come out, and we didn’t know if open source would grow, we knew there would be roadblocks and things we’d have to overcome along the way, but it had promise. We thought this would be the way of the future.”
https://www.linux.com/news/ibms-wager-open-source-still-paying
Hewlett Packard Enterprise | HP Inc
- Is Hewlett Packard Enterprise up for sale?
As explained by author Kevin McLaughlin, “a buyout would allow HPE, currently the world’s largest seller of servers and storage systems, to streamline outside the glare of public scrutiny.”
Following McLaughlin’s claims, shares in the company spiked seven percent on the stock exchange, yet closed around 3.5 percent as more details of the potential deal emerged.
According to Reuters, the firms are focused on acquiring certain software assets from the vendor, worth somewhere between $US6 billion and $US8 billion, rather than the entire company.
http://www.arnnet.com.au/article/604318/hewlett-packard-enterprise-up-sale/
HPE Reportedly Considers Going PrivateReuters reported last week that sources familiar with the HPE private equity discussion said that buyout firms are focused on acquiring some software assets that HPE has been considering divesting, and that those are worth between $6 billion and $8 billion.
The Reuters report added that the deal was for just the software assets and not the entire company. HPE’s software assets include technology gained in acquisitions such as Vertica Systems, Autonomy, and Mercury. The technologies include data analytics, cloud orchestration, and systems management. That group hasn’t been paying off as strongly as the company’s hardware business has.
http://www.informationweek.com/software/hpe-reportedly-considers-going-private/d/d-id/1326467
$40 billion buyout rumour persists as HPE cloud chief and storage boss leave companyA number of key executives are to leave Hewlett Packard Enterprise, with the top-level departures coming at a time when rumours abound that the company is subject to a $40 billion takeover attempt.
Head of Cloud Bill Hilf, along with Manish Goel, HPE’s storage boss, are set to leave the company for pastures new. However, the reshuffle did not stop there, with Robert Vriji, managing director of sales for the Americas also set to leave, as well as the high-profile retirement of Martin Fink, CTO and head of HP Labs. Fink will retire at the end of the year.
- PE Firms Looking to Acquire Hewlett Packard Enterprise Software Assets Worth $6B-$8B
Private equity firms, including KKR NYSEKK, Apollo and Carlyle Group are seeking to acquire certain software assets from Hewlett Packard Enterprise, according to sources reported by Reuters on Friday. Earlier in the day, The Information reported those firms might make a bid for all of HPE.
Hewlett Packard Enterprise declined comment on the report, while KKR, Apollo and Carlyle did not comment.
http://www.benzinga.com/news/16/07/8282979/bemzingas-weekend-m-a-chatter
Storage
- INFINIDAT Reports 60% Quarter Over Quarter Growth in Q2
INFINIDAT continued to achieve significant sales traction in key vertical markets in Q2, reporting that 32 percent of sales was to leading firms in the finance sector, 28 percent was in technology, telecommunications and cloud services, and 24 percent was in healthcare and life sciences. INFINIDAT added several new customers in Q2, including BT (world-leading communications services provider), HMSA/Hawaii Medical Service Association (health insurer), Triple C (cloud services provider), and Credit Andorra (financial services).
http://www.cso.com.au/mediareleases/27834/infinidat-reports-60-quarter-over-quarter-growth/
- How Dell Raised $67 Billion for the Biggest Tech Deal Ever
Some of Dell’s own potential banks balked early on, arguing that they simply could not sell enough junk bonds to finance the deal, and other lenders refused to participate if they could not easily resell some of the loans to other investors.
Then Dell, Silver Lake and the bankers came up with an idea, pushed hard by Mr. Durban: Sell more high-rated loans and bonds, a questionable idea for a junk-rated company like Dell.
Other
- Oracle’s Latest Purchase Opens the Door for More Pricey Tech Deals
Software-as-a-Service (SaaS) companies like Salesforce, which deliver software over the Internet, are of particular interest because that sales delivery model is becoming more successful with corporate customers. Neeraj Agrawal, a general partner with Battery Ventures, estimates that SaaS—as hot as it’s been—still represents just 15% of current software market, but he suggests that won’t be the case for long.
- Verizon buys Fleetmatics for $2.4B in cash to step up in telematics
More generally, the acquisition of Fleetmatics points to ways that Verizon is continuing to use its balance sheet to finance investments into newer areas to offset continuing declines in its core, legacy business of basic phone services. As that market has become increasingly commoditized and people turn to other, digitised forms of communication away from traditional voice services, Verizon is hoping to invest into newer areas to move beyond “dumb pipe” status to keep its margins up, and revenues growing.
While its acquisition of AOL (and now Yahoo) will help Verizon scale up its media, advertising and content operations, Fleetmatics is pointing straight to Verizon’s ambitions in enterprise services, and specifically enterprise mobility.
https://techcrunch.com/2016/08/01/verizon-buys-fleetmatics-for-2-4b-in-cash-to-step-up-in-telematics
- Salesforce buys word processing app Quip for $750M
It’s not clear why Quip — which was growing and in the enviable position of being very selective about taking funding from VCs — decided to sell up to Salesforce. But it’s an interesting turn in the ongoing consolidation that we’ve seen in the enterprise market, and how that is transforming the bigger companies that are doing the buying.
https://techcrunch.com/2016/08/01/salesforce-buys-word-processing-app-quip-for-750m/
- AWS prints money for Amazon, but can Microsoft, Google and IBM catch up?
As revealed last week, the AWS division of Amazon reported 58 percent year-to-year growth to almost $US2.9 billion, supported by continued operating efficiency that enabled the business to reach $US718 million in operating profit.
Worldwide Cloud infrastructure services expenditure grew 52.3 percent year on year in Q2 2016, with Canalys findings pitching AWS as the leading Cloud infrastructure services provider, accounting for 30.4 percent of total spend.
http://www.arnnet.com.au/article/604414/aws-prints-money-amazon-can-microsoft-google-ibm-catch-up/
- Is the End Near for Tableau Software Inc?
Data visualization company, Tableau is scheduled to report second quarter earnings tonight, after the market closes. The stock is perpetually one of the most beaten down during earnings season. After Q4 earnings, shares dropped nearly 50%, only to drop an additional 10% following Q1 earnings. Early indications appear as if they are heading in the same direction ahead of tonight’s report. Just this week Deutsche Bank downgraded the stock to “hold” from “buy” on concerns of slow margin growth. For Tableau to stop the slow bleed, it will have to convince investors that this and future quarters can generate sustainable growth.
http://www.valuewalk.com/2016/08/tableau-software-inc-data-shortsell-earnings/
- Teradata: Could This Be The Start Of Something Big?
At this point, TDC has more than $7.20/share in cash although 98% of the cash is offshore. It also has long-term debt of $552 million. The current enterprise value is $3.44 billion which produces an EV/S for the current year of 1.49X. Based on the company’s current projection, the free cash flow yield for TDC will be 8% or so. The company indicated that there is potential upside to the free cash flow estimate based on the year-ending profile of assets and liabilities, particularly A/R. The company has a P/E of 12X current year non-GAAP earnings. Stock-based comp is quite low at around 10% of reported non-GAAP earnings. The other adjusting items have to do with one-time charges related to the disposition of the company’s marketing assets business as well as reorganization costs. With those kind of valuation metrics, there is plenty of upside if the company’s efforts to re-invent itself are even marginally successful. With that level of valuation, the company presents a very attractive acquisition target to both strategic and private equity investors. In the wake of the company’s guidance for the next two quarters, I think downside exposure is very limited as well.
http://seekingalpha.com/article/3994915-teradata-start-something-big
Big Data acquisitions: All about the enterpriseWhy would Teradata execute a services play not just once, but twice? Ultimately, it would seem to come down to Enterprise sales. Implementing big data — and doing it successfully — is still hard, and experienced consulting shops/Systems Integrators (SIs) can make enterprise customers feel a lot more confident moving forward with it. That puts them in the perfect position to recommend tools and technologies. So, having a manageably small, but geographically distributed, services organization can be very helpful to Teradata indeed.
http://www.zdnet.com/article/big-data-acquisitions-all-about-the-enterprise/
Photo: Phoebe Dill