about 3 years ago • 3 mins
Intel has a lot to process right now: reports over the weekend suggested the tech giant wants to outsource some of its chipmaking production to rivals Samsung and TSMC.
What does this mean?
The chipmaking industry can be split into two halves: the half that designs the chips – which includes American heavyweights Nvidia and Qualcomm – and the half that makes the chips, like TSMC. Intel, for its part, figured it could keep both plates spinning at once, but, uh, it might’ve gotten a bit ahead of itself: the company’s struggled to stay at the cutting edge of microchip technology, and it’s seen its grip on the market start to slip. Things came to a head last year when the company revealed its newest technology was six months behind schedule – and now, it seems, Intel’s finally admitted it can’t handle this alone.
Why should I care?
Zooming in: Everyone loves a quitter.
The news might be too little, too late in one activist investor’s not-so-humble opinion: the firm reckons Intel’s been too slow in outsourcing its manufacturing, and it’s now suggesting that selling the chip manufacturing business altogether could help revive Intel’s fortunes. And investors seem to think the hedge fund is onto something: Intel’s shares have outperformed the tech-focused Nasdaq index by around 5% since news of the activist’s involvement broke two weeks ago.
For markets: Samsmug.
Samsung’s shares hit an all-time high on the news, and its shareholders had been feeling pretty positive to begin with: the South Korean conglomerate’s stock has risen 60% since September. And with its latest smartphone hitting the shelves this week, things could be about to get even better...
Keep reading for our next story...
What’s Going On Here?
Private equity firm Permira – which bought Dr. Martens in 2014 and has spent the last few years sprucing it up – announced plans on Monday to list the iconic British bootmaker on the London Stock Exchange.
What does this mean?
The initial public offering (IPO) won’t actually see Dr. Martens raise any fresh money from investors: it’s mostly just a way for owner Permira – which is in the business of buying companies and selling them on for a profit further down the line – to sell a portion of its shares. And with global stock markets rallying, it’s well-placed to fetch a good price for them: analysts are expecting the IPO to value Dr. Martens at more than $2.5 billion. This must be some reliable footwear, because that’s a big step up from the $450 million Permira paid all those years ago…
Why should I care?
Zooming in: These boots are made for listing.
Permira’s first move when it bought Dr. Martens was to boost the brand’s global presence, and its strategy seems to have paid off: the company sold 700,000 more boots between March and the end of September last year than the same time in 2019. That’s largely down to some shrewd investments in ecommerce, whose revenue over the same period jumped by 74%. And when you consider how many high-profile retail casualties there have been lately, that’s no mean feat.
The bigger picture: Happy new year!
Permira’s announcement might come as a relief to European investors, who saw the number of blockbuster IPOs in the region lag behind America’s last year. And this could be just the start: there’s a long pipeline of companies reportedly set to list on the region’s markets in 2021. The London Stock Exchange, for its part, might be hoping to win as many of them over as it can – especially after the UK government’s recent announcement that it was reviewing how to make the country’s stock markets even more appealing.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.