There have been many noteworthy developments in the technology space recently. Some of these will likely have a material impact on the companies in the sector and the markets they serve.
Google (GOOG) has recently disclosed that it has been looking to develop delivery drones. The company’s Project Wing research initiative is aimed at developing drones that are capable of making deliveries. This follows Amazon.com’s (AMZN) announcement late last year that it has been exploring this possibility. Aerial delivery could offer companies a cheaper, faster, and less wasteful way to move goods, but a number of important issues need to be ironed out. Even assuming these efforts are successful, it appears likely these projects will take at least several years to come to fruition.
Amazon.com Agrees to Buy Twitch
Amazon.com has agreed to acquire Twitch for $970 million. Twitch is a live video- streaming platform mainly focused on interactive entertainment. The site hosts content of users playing video games. Though the concept of watching others play video games as a form of entertainment may seem alien to some people, it has been catching on in a number of important markets, including South Korea, China, and the United States. Growth is expected to continue in these markets in the coming years, as the next generation of consoles gains traction among gamers. This addition should allow Amazon to expand into a market with attractive prospects, and may also enable the book e-tailer to compete with Google (which owns YouTube) in this arena.
Alibaba’s Upcoming IPO
Chinese e-commerce giant Alibaba appears set to complete an initial public offering in the United States in the coming weeks. As the largest e-commerce company in China, Alibaba has operations that include digital media, cloud computing, and payments services. The IPO is expected to raise up to $20 billion, making it one of the largest ever in the US. The company will be listed on the New York Stock Exchange under the ticker symbol BABA. The timing appears right for such a move, given the rich valuations that other technology offerings have commanded in recent years and with domestic equity markets near all-time highs.
The company’s revenues and earnings increased significantly in the most recent period. Alibaba is well positioned in attractive markets, and we expect strong growth in the years ahead. That said, conservative investors should probably remain on the sidelines for a while. Aggressive accounts should tread carefully here. Much depends on the equity’s valuation when trading commences, though readers are advised that equities without much trading history are more difficult to value.
Apple’s Upcoming Announcements
Apple (AAPL) is expected to announce two new iPhones on Tuesday, September 9th. The iPhone 6 models are rumored to be available on Friday, September 19th. Possible new features include a larger screen, a hard sapphire screen, and/or a near field communications chip for the phone(s). There is also speculation the company will introduce a payments feature and/or an iWatch next Tuesday. Readers that are interested in Apple’s prospects should keep an eye out for the upcoming announcement and take note of how Wall Street responds. The number of upcoming offerings, their availability dates, the presence of innovative features, and anything else that might have an impact on the company’s future performance will no doubt be closely scrutinized by the investment community. They will also be compared to competing products from rivals such as Samsung, which has just unveiled two new versions of its Galaxy Note phones, as well as a new smartwatch.
Compuware Going Private
Software and services provider Compuware (CPWR) has agreed to be acquired by Thoma Bravo LLC, a private equity firm, for $2.5 billion. Stockholders will receive a total of $10.92 for each share of Compuware owned. This figure includes a net cash payment of $10.25 per share and $0.67 a share associated with the spinoff of subsidiary Covisint. The transaction was unanimously approved by the board of directors, but still requires shareholder and regulatory approvals. Assuming this occurs, the deal is expected to be completed early next year.