Comments (0)

By Tai, August 23, 2010 7:39 pm

• One-day loss for Intel is 3.52%, one-day return for McAfee is 57.07%
• Considering the trend, the loss for Intel was rather low, indicating that market punishment was not as severe for acquisition of unrelated (software) business
• My speculation is that perhaps the market was expecting a deal from Intel, as signaled by high trading volume and declining stock price prior to the announcement
• The high return on MFE signals significant liquidity motivation to exit the company
• INTC listing NASDAQ might have reduced the loss while MFE listing on NYSE might have increased the gain
• My speculative view on strategy of the deal: apart from hardware security, Intel now has access to cloud security which can be used to offer complementary service to key cloud service providers i.e. Amazon, Salesforce… This strengthens Intel’s alliance beyond the long-standing one with Microsoft (which is currently lost in the cloud). Then what can would Intel do with an alliance? War against Apple?
• Addendum: market reaction is favorable for Intel, signaling good corporate governance

Comments (1)

By Tai, July 25, 2010 9:02 am

And here come $126 Chinese iPed and $35 Indian iPad clone. This is not to mention the not-so-an-imitation Hewlett-Packard’s Slate.

The real value Apple is creating, however, is not only encapsulated in the hardware. What matters, and cannot be imitated by competitors, is the information exchange platform AppStore through which Apple has earned sweet royalties. Furthermore, while thousands of third-party companies and developers strive their best to be profitable building applications, Apple reaps the reward and share none of the failure.

Same does Facebook. And Wii.

This is the era where hardware has become commodities and information and services bring more value. And revenue.

What other platforms are you thinking of?

Comments (0)

By Tai, June 12, 2010 2:00 am

Microsoft (MSFT) has held the tradition of capitalizing only a very small portion of its software research and development costs.

The amount it is conservatively understate approximates US$10b, which translates to US$6.5b shareholder value. Calculation below.

If this adjustment is done, MSFT market capitalization would be US$229b, higher than that of Apple (AAPL) which amounts $227. This has not even inusual market overreaction to good information.

In sum, with only a slight legal and reasonable accounting adjustment, Microsoft can easily come back to be world’s most valuable technology company. Issue is: is the status quo really important besides media coverage?

Detail accounting adjustment and calculation is below:

Assumptions

• R&D is capitalized using straight-line depreciation over expected life of the software which approximates three years
• Amortization is taken from half a year’s spending

Capitalization

Adjustment

Comments (0)

By Tai, June 6, 2010 6:15 pm

The SecondMarket private equity website values Facebook at $25b.

Here is a little perspective

In the private equity market, supply can’t possibly meet demand thus the illiquidity creates the self-fulfilling prophecy of a Hype.