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Technology Round Up - October 2, 2013
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.
The Latest on Blackberry
Beleaguered mobile-device maker Blackberry (BBRY) has agreed to be acquired by a consortium of investors led by Fairfax Financial. The total purchase price will approximate $4.7 billion ($9.00 per share). Blackberry’s Board of Directors has approved the deal. The consortium is permitted six weeks to conduct due diligence. Blackberry is entitled to shop around for an alternative buyer during this time, subject to payment of a termination fee should an alternative offer be accepted.
The company reported unfavorable results in the second quarter of fiscal 2013 (ends March 1, 2014). For the period ended August 31st, revenue came in at roughly $1.6 billion, significantly lower than the prior-year period. Blackberry posted a loss from continuing operations of $965 million ($1.84 per share), according to Generally Accepted Accounting Principles. This includes a noncash, pretax charge against inventory and supply commitments of roughly $934 million (about $666 million aftertax). This is mainly attributable to (the unfavorable performance of) the company’s Blackberry Z10 devices. Adjusted loss from continuing operations was $248 million ($0.47 per share). On the bright side, the company is taking steps to improve performance. This includes efforts to cut operating costs and increase focus on core markets.
Apple’s New Offerings
Apple (AAPL) has recently introduced several new offerings. This includes the iOS 7, an upgraded mobile operating system. Also, two new iPhones have made their debut. The iPhone 5S is the successor to the iPhone 5. This new offering will cost between $199 and $399 per unit (depending on the number of gigabytes of storage). It is very fast, has a long-lasting battery, an improved camera system, and impressive graphics. The iPhone 5C is a lower-cost model. It is plastic, and costs between $99 and $199. This is important because it ought to allow Apple to better penetrate emerging markets, where per capita income is lower and more affordable smartphones are popular. The two iPhones sold over nine million units in the first three days of availability. These additions should help the company compete in the mobile arena with rivals (such as Samsung Electronics) that use Google’s (GOOG) Android platform.
Investments at IBM
IBM (IBM - Free IBM Stock Report) has agreed to acquire The Now Factory, a privately held provider of analytics software headquartered in Dublin, Ireland. The Now Factory provides software that helps communications service providers (CSPs) deliver enhanced customer service. The demand for this kind of software is being driven by dramatic growth in the volume of real-time data that is being produced by mobile devices. This addition nicely complements the IBM MobileFirst Analytics portfolio, which is designed to enhance the way organizations analyze mobile device usage to improve customer service. Financial terms of the deal were not disclosed.
The company has also recently announced it is investing $8 million in a new cloud center in the Barcelona area. It is the company’s first cloud center in Spain, and its 26th across the globe. It will offer clients around the world a wide range of infrastructure services and cloud platforms. This move reflects IBM’s commitment to cloud technology, from which it expects to generate about $7 billion in annual revenue by 2015.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.