Digital Daily » market cap

Intel, AMD Announce Dual Core Litigation Settlement

John Paczkowski — Thu, 12 Nov 2009 14:36:38 +0000

Wow. Intel and AMD’s seemingly endless legal battles have finally ended. The two companies said early Thursday that they have reached a comprehensive agreement that resolves their many antitrust and patent disputes.

Under terms of the agreement, Intel (INTC) will pay AMD (AMD) $1.25 billion (nearly a quarter of AMD’s $4.46 billion market cap) and agree to “abide by a set of business practice provisions” presumably crafted to temper Intel’s allegedly anticompetitive practices. Here are details of the agreement:

Business Practices Provisions Prohibit Intel From:

Offering inducements to customers in exchange for their agreement to buy all of their microprocessor needs from Intel, whether on a geographic, market segment, or any other basis (Section 2.1.1.a)

Offering inducements to customers in exchange for their agreement to limit or delay their purchase of microprocessors from AMD, whether on a geographic, market segment, or any other basis (Section 2.1.1.b)

Offering inducements to customers in exchange for their agreement to limit their engagement with AMD or their promotion or distribution of products containing AMD microprocessors, whether on a geographic, channel, market segment, or any other basis (Section 2.1.2a-b)

Offering inducements to customers in exchange for their agreement to abstain from or delay their participation in AMD product launches, announcements, advertising, or other promotional activities (Section 2.1.2.b)

Offering inducements to customers or others to delay or forebear in the development or release of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.2 and 2.1.2)

Offering inducements to retailers or distributors to limit or delay their purchase or distribution of computer systems or platforms containing AMD microprocessors, whether on a geographic, market segment, or any other basis (Section 2.2.1)

Withholding any benefit or threatening retaliation against anyone for their refusal to enter into a prohibited arrangement such as the ones listed above.

In return, AMD will drop all its pending litigation against the company and pull out of regulatory complaints worldwide. Finally, the two rivals will enter into a five-year patent cross-licensing agreement.

In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”

Interesting. Clearly, AMD CEO Dirk Meyer’s earlier comments about the ratification of its complaints about Intel’s business practices and the company’s hope for a future in which AMD’s “ability to succeed as a business is really determined by the quality of our products and customer relationships” was quite prefigurative.

During a call to discuss the settlement, Meyer said the accord marks the beginning of a new era, one that changes the game for AMD. “It is an important milestone for us, for our customers, our partners, and most importantly–for consumers and businesses worldwide,” Meyer said.

“It is the culmination years of litigation and regulatory engagement, and we are optimistic that it will usher a new era for our industry,” the CEO continued, further noting that change may not be immediate. “We recognize that it will take time for people to understand how the operating conditions in processor business have changed–but make no mistake–they have changed….We look forward to healthy competition with the mutual respect one would expect between world-class competitors.”

It is unclear if the settlement will affect the antitrust suit brought against Intel by New York Attorney General Andrew Cuomo last week as Cuomo hasn’t yet commented. But the European Union says it will not change its decision in May to fine Intel a record $1.5 billion for anticompetitive behavior.

“The European Commission takes note that Intel and AMD have settled all their litigation and that Intel is paying AMD compensation of one-and-quarter billion dollars,” said an EC spokesman. “But Intel has an ongoing obligation to comply with the commission’s antitrust decision and with EU competition law. The commission continues to vigorously monitor Intel’s compliance with its obligations under the EU antitrust decision.”

McNamee’s Elevation Partners Henceforth Known as Exaggeration Partners

John Paczkowski — Thu, 30 Jul 2009 16:17:53 +0000

“June 29, 2009, is the two-year anniversary of the first shipment of the iPhone. Not one of those people will still be using an iPhone a month later.”

– Palm investor Roger McNamee, March 6, 2009

“The statement…that ‘not one’ person who bought an Apple, Inc. iPhone on the first shipment date ‘will still be using an iPhone a month’ after the two-year anniversary of that day is an exaggerated prediction of consumer behavior pattern and is withdrawn.”

– Palm Free Writing Prospectus, March 9, 2009

Good thing Palm withdrew investor Roger McNamee’s your-next-iPhone-will-be-a-Pre claim because there obviously wasn’t much truth to it. If there was, well, there would have been a massive rush on Pres nationwide this past month. And that clearly didn’t happen.

In fact, by all indications, the Pre hasn’t even come close to performing as well at market as McNamee promised. Though it was the most successful handset launch in Sprint’s history, it didn’t come close to supplanting the Apple (AAPL) iPhone. Hell, it couldn’t even stop Sprint from losing 991,000 subscribers during the second quarter of 2009.

Which is not to say that the Pre and what it’s done for Palm (PALM) aren’t remarkable. Any device capable of transforming a $423 million market cap into a $2.9 billion one in 12 months is nothing short of a miracle, as I’ve noted before. Seriously, check out the chart below.

It’s just that McNamee was, and is, as full of it as a beef ranch manure truck. Because at a run rate of roughly 25,000 per week (according to the latest stats from Pali Research), Pre sales are decent. Nothing more, nothing less.

Consider this: In its first quarter, 8.6 percent of Sprint’s (S) 35.4 million post-paid subscribers upgraded handsets. In its latest quarter approximately nine percent of the company’s 34.4 million post-paid subs upgraded. So despite all the hoopla over the Pre, just 15,000 to 50,000 more Sprint users upgraded their handsets this quarter than last quarter, a period with no important handset launches.

Given Sprint’s substantial base of Palm handset owners, that’s not exactly impressive. Makes you wonder if that “accidental” price cut we saw at Best Buy (BBY) earlier this week might become an official one before the end of summer.

Below, McNamee pokes fun at himself in the video introduction to his D7 appearance:

[ See post to watch video ]

Dell: Who You Gonna Buy?

John Paczkowski — Mon, 29 Jun 2009 19:40:51 +0000

Bernstein Research analyst Toni Sacconaghi has a few ideas about what Dell should do with the nearly $11 billion in cash reserves it’s sitting on, and they don’t include buying Palm.

Sacconaghi believes that Dell (DELL) isn’t interested in a “transformational” acquisition, though its interest in the handset market might suggest otherwise. Rather, the company is mulling the acquisition of small- to medium-sized enterprise-related companies.

“While there has been speculation that Dell could look to acquire a handset company and we continue to believe that a consolidation play in the PC space could make sense for additional details, Dell appears focused on boosting its enterprise business by acquiring small to medium sized companies with strong margin profiles and higher levels of recurring revenues,” Sacconaghi writes.

Which companies? Software, services or storage and networking outfits, most likely, says Sacconaghi. Companies like Perot Systems (PER), Salesforce.com (CRM), Compellant (CML) and 3Com (COMS).

“We see Dell potentially looking to acquire a smaller remote infrastructure management company, or a smaller outsourcer–Perot fits the latter description, and is possible, but it is unclear that it is a willing seller, and its unique concentration (50 percent) in healthcare may be too narrow a platform for Dell’s offerings,” the analyst writes.

“…Dell’s software acquisitions to date have largely centered around systems management and we believe that similar types of companies could be acquired to further expand Dell’s capabilities. Also in software, we believe that [Salesforce.com] would be strategically consistent with Dell’s efforts to drive business at mid to large enterprises, but would be expensive ($4.8B current market cap) and would have a limited impact on revenues ($1.1B in their last FY)….

“Given that Dell’s biggest enterprise partnership is in storage, we believe the company could look to acquire additional IP for its own use. Compellent and CommVault (CVLT) could be appropriate targets. We think a networking deal is less likely, but purchasing someone such as 3COM and attempting to commoditize the networking space would not be inconsistent with Dell’s stated enterprise strategy.”

An interesting list of targets. Still, you’ve got to wonder why it doesn’t include Palm (PALM). After all, Dell really can’t afford to miss out on the handheld market completely. Can it?

Palm: The Turnaround Story of the Year

John Paczkowski — Wed, 24 Jun 2009 22:10:14 +0000

A quick but noteworthy follow-up to my earlier post about the incredible gain in market cap Palm made in the last year. Palm’s (PALM) valuation is actually higher than the $1.95 billion I quoted earlier.

Quite a bit higher, it turns out.

$1.95 billion is the company’s market cap as of March 27, when it had 137.84 million shares outstanding. But this figure doesn’t include preferred shares, etc. So Palm’s true valuation–equity valuation with convertible preferred shares, exercisable and nonexercisable in-the-money options, warrants and whatnot–at its current share price of $13.87 is about $2.9 billion.

$423 million to $2.9 billion in 12 months.

Turnaround story of the year. For now, anyway….

Pre Makes Palm a New Man in Only Minutes a Day

John Paczkowski — Wed, 24 Jun 2009 16:50:27 +0000

Palm’s market cap is currently $1.95 billion. A year ago it hovered around $400 million.

Amazing when you think about it, really. On the promise of the Pre and the company’s new WebOS operating system alone, Palm (PALM) has added more than $1.5 billion to its market cap. A quick and impressive recovery, and one that analysts say is likely to continue now that the device has had a successful launch.

In an investment note today, RBC analyst Mark Abramsky esimates that Palm has sold 150,000 Pre handsets to date and predicts it will sell 4.1 million in fiscal 2010 and 6.5 million in fiscal 2011.

Over at Credit Suisse (CS), analyst Deepak Sitaramaneven is even more optimistic. He sees Palm selling 7.7 million Pres in 2010. “The successful launch of the Pre at Sprint Nextel (S) has raised carrier interest given Palm now offers a credible alternative to Apple (AAPL),” Sitaramaneven wrote. “We believe this will drive top-line growth of 144% in calendar 2010, and our estimate is predicated on 7.7 million units in calendar 2010.”

That seems a rather…buoyant prediction for a company still grappling with Pre supply issues. That said, if Palm is able to score distribution deals with Verizon (VZ), AT&T (T), Vodafone (VOD) and others by the beginning of next year, the prediction may be within the realm of possibility. Something to think about as the company prepares to report quarterly earnings tomorrow.

O Ye Apple Investors of Little Faith

John Paczkowski — Thu, 15 Jan 2009 21:13:02 +0000

[ See post to watch video ]

Yang: I'll Probably Never Be CEO Again

John Paczkowski — Tue, 18 Nov 2008 18:49:09 +0000

[ See post to watch video ]

And Be Sure to Give Our Best to CompUSA When You See It

John Paczkowski — Mon, 20 Oct 2008 20:51:33 +0000

Circuit City’s latest ad campaign ends with a “We’ll Hook You Up” tagline. Its marketing message was presumably meant to refer to good prices, but today it’s referring to something else: layoffs. The long-suffering electronics retailer is reportedly considering a plan to shutter at least 150 stores and sack thousands of employees. Were the move to occur, it would help Circuit City (CC) avoid filing for bankruptcy protection. But with its once proud $5 billion market cap fallen to just $68 million and its turnaround plan proving to be more of a death spiral, the company may just be prolonging the inevitable.

NOTE: Consumer electronics store CompUSA would like it known that while it did close all 103 of its stores in 2007, it returned from the dead in 2008 under new ownership and now has 17 retail locations and a Web site.

Weekend Update, 10/10/08

John Paczkowski — Sat, 11 Oct 2008 07:00:25 +0000

The best thing that can be said of the week ending Oct. 10, 2008, is this: It’s over.

Marked by panic selling and wet-your-pants fear, it was one of the worst weeks in the financial world’s history–a week that cut the legs out from under Google (GOOG), beat Yahoo until its market cap bled purple and caused the Dow Jones Industrial Average to swing more than one thousand points on an intra-day basis.

It was a week that saw Sequoia Capital warn its portfolio companies to prepare for a protracted downturn or, in the words of partner Michael Moritz, be “spattered on windshields and radiator grills and be forgotten.” Turns out Bubble 2.0 sounds a lot like Bubble 1.0 when it pops.

Beneath the screams of agony echoing across Wall Street, there was other news worth noting:

Advanced Micro Devices (AMD) announced plans to spin off its manufacturing operations.
“Legal” turned out to be a poor choice of adjectives for RealNetworks’ RealDVD (RNWK), the company’s new “legal” DVD ripper. A judge extended the temporary restraining order barring the company from distributing it.
This just in: Time Warner’s (TWX) AOL and Yahoo (YHOO) are still talking about a merger and Generalissimo Francisco Franco is still dead.
Where is Microsoft (MSFT) in all this? Sitting on the sidelines hoping the deal will go through.
Finally, activist investor Eric Jackson, the creator of the Yahoo! Plan B investor community, revealed Yahoo! Plan C: his hedge fund’s divestiture of its Yahoo stake.

Boom: Apple Worth More Than Google

John Paczkowski — Wed, 13 Aug 2008 19:18:23 +0000

As Steve Jobs would say: “BOOM.” Apple (AAPL) has eclipsed Google (GOOG) in market value. Apple’s current market cap: $159.37 billion. Google’s: $157.56 billion. Not that we didn’t see this coming. Indeed, Valleywag predicted it back in November 2007. “Apple knows how to design not just gadgets, but the businesses that go around them,” the blog noted. “And as a result, we wouldn’t be surprised if Apple is worth more than Google within two years.”

Make that two years or less.

I wonder if Michael Dell would shut Apple (AAPL) down and give the money back to its shareholders now?