[quote=ltsdd]Anyone else here seeing the similarity between the “irrational exuberance” of the stock market, recent/current IPOs and mergers & acquisitions to those leading up to the major market corrections in 2001 & 2002?
Stock prices may have been reacting positively to these news. However, my interpretation of these M&A is that these companies probably realized there’s little or no growth in the near future and are using M&A as a way to create more value (read stock prices).
Out of curiosity, I searched it up and I found this site that shows 7 out of 10 largest M&A transaction worldwide occurred in 1999 & 2000.
Are we closer to a serious correction in the stock market?[/quote]
At least in the semiconductor industry, consolidation is occurring out of a need to survive…It’s the way business is being done. The big buyers are OEMs and the larger companies have been bundling their offerings, and this makes it difficult for smaller players that don’t have a complete solution. Also, there is ever increasing pressure from the new players from asia, that is pushing prices and margins down.
Qualcomm is trouble too. That Samsung Galaxy S6 loss broke up their bundled offering at tier 1 OEMs, and allowed other players back in. And that might not be temporary, as Samsung starts building their own chips in other areas as well. Because Samsung can.
In China, the chinese chip companies have not caught up..yet.. But that gap is closing as well, and closing pretty fast. Both Huawei and Xiaomi are both following Samsung’s playbook and planning to source their own chips as well, once they have learned from U.S. companies. Companies like MediaTek are also giving others a run for their money. And then there’s intel, that doesn’t mind taking losses on mobile to buy customers (at least not right now)…
A lot of these deal makings are probably also happening out of a need to appease shareholders. Earnings growth is not as fast as the street would like, so rather than focus on chip engineering, looks like financial engineering is more effective at boosting share price (at least in the short term)…
While the past few years have been a growth in hardware and chips, I think we’ve reached a saturation in which hardware is maturing.. Software and uses of all that shiny new hardware has not yet caught up. So, while growth in the hardware might be slowing down, it seems like growth in the software sector/applications is still strong….
