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It’s a day of the big getting bigger, discussing ways to gang up on bigger rivals, and simply thinking big.
Broadcom (AVGO) opportunistically is trying to buy Qualcomm (QCOM) in what would be the richest tech deal ever. If that unlikely deal were to go through, it would be a triumph of private-equity-fueled growth given Broadcom’s backing from tech private-equity leader Silver Lake. It’s also, surprisingly, a victory of sorts of an old-school survivor. Broadcom is the descendent of a nearly 60-year-old unit of the original Hewlett-Packard. Semiconductor companies are like enterprise software companies: they don’t die easily.
Salesforce (CRM) and Google (GOOGL) agreed to collaborate on the cloud. That’s a victory for Google, which is fighting Microsoft (MSFT) and Amazon (AMZN) in that business. It’s also a win for Salesforce, which presumably got a deal from Google.
Perhaps the most fascinating non-deal of the day is CNBC’s report that Disney (DIS) tried buying 21st Century Fox’s (FOX) entertainment assets, not including its news, broadcast TV, and sports properties. Disney has been a savvy acquirer, and it’s surprising that Rupert Murdoch, also typically a buyer, would consider selling. That means he’s likely eyeing what he’ll buy next.
The underlying theme behind all this is the increasing velocity of digital transformation across multiple industries. End markets for chips are in flux even as they experience great growth. (Smartphones are in; PCs are out.) The cloud, for a while more of a metaphor than a giant business, is re-ordering all sorts of industries. (Microsoft is tech’s most rejuvenated company on the strength of this theme.) And Disney’s machinations can all be viewed through the prism of “cord-cutting,” itself a manifestation of video streaming, a digital transformation if ever there was one.
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Two of the keenest writers about China in the Western press are China-based columnists for The Wall Street Journal, Andrew Browne and Li Yuan. Both wrote important pieces in the aftermath of the recent party congress. Browne warned about the dangers of one-man rule following the ascent of Xi Jinping. Li argued that U.S. tech giants may not understand the power dynamics of operating in China nearly as well as they think they do.
