Dell Mulls Return to Market Four Years After Going Private

Just over four years since Michael Dell took his namesake PC company private, the billionaire is considering taking Dell Technologies public again in a move to help it raise cash and reduce its substantial debt. An initial public offering would undo one of the biggest leveraged buyouts the tech industry has ever seen.

The board is meeting later this month and will discuss strategic options including an IPO, according to people familiar with the matter. Round Rock, Texas-based Dell may also decide not to make any such moves at this time, said the people who asked not to be identified because the talks are private.

Dell took took his company private in 2013, when he teamed up with Silver Lake on a leveraged buyout. That freed Dell to cut costs and work to become a bigger supplier of hardware and software for corporate data centers without the quarterly investor scrutiny that comes with being a public company. Three years later, Dell acquired storage-technology provider EMC Corp. and its majority stake in data-center software vendor VMware, taking on a massive debt load to seal the $67 billion deal.

Raising cash could help the company further expand or pay off some of the debt. Dell Technologies has about $46 billion of debt, according to data compiled by Bloomberg. That includes about $3 billion of bonds maturing in 2018 and $4.35 billion due next year while the company also has loans outstanding, the data show.Another option is to buy the rest of VMware that Dell does not already own, one person familiar with the matter said. VMware shares surged the most in a year and a half to $149.87, a record high.

Dell is also considering a public share sale for its Pivotal Software Inc. cloud-computing venture. Dell met with bankers last year to discuss that possibility and was told the company could fetch a valuation of $5 billion to $7 billion, said one of the people. Still, any Pivotal offering may wait until the company has converted more of its business into wider-margin software and subscriptions and away from less-profitable services businesses, the person said.

Pivotal, a cloud software and services firm, was once a joint venture of VMware, EMC and General Electric Co. and became part of Dell after the EMC acquisition.

Dell spokesman Dave Farmer declined to comment while VMware couldn’t immediately be reached for comment.

A public offering would add to a growing list of big tech companies preparing to go public in 2018. File-sharing company Dropbox Inc. has filed confidentially for an IPO and is aiming to list in the first half of the year, people familiar with the matter said earlier this month. Spotify, owner of the world’s largest paid music service, plans to execute its unconventional direct listing this quarter, a person familiar with the matter said this month.

By –Bloomberg

Artificial Intelligence Nears the Summit of Hype in Davos

Artificial intelligence approached the summit of hype at this year’s World Economic Forum.

AI was on the lips of seemingly every corporate chief and policy maker attending this year’s conference in Davos, Switzerland. On Wednesday, the term "artificial intelligence" appeared in more than 20 headlines and stories Bloomberg ran about the gathering.

British Prime Minister Theresa May announced a new government-funded center to advise on ethical use of AI and French President Emmanuel Macron launched a 10 billion euro innovation fund aimed at new technologies like AI.

AI is going to be more important than humanity’s mastery of fire or electricity, Google CEO SundarPichai said. Alibaba founder Jack Ma warned that AI and robots are going to "kill a lot of jobs" and could start a third world war. "Each technology revolution has made the world unbalanced," Ma said.

Kai-Fu Lee, the former China head at Google, talked up a different sort of existential AI threat: the fear of missing out. Executives shouldn’t let human-resources departments tell them they can’t afford the high salaries AI experts command. "You’ve got to break the scale for at least one person" with the right know-how, he told them.

IBM’s Ginni Rometty invoked Karl Marx, telling her fellow corporate leaders that they had an obligation to "prepare the workers of world for this revolution."

Johan Aurik, managing partner at consulting firm A.T. Kearney, argued AI could automate a large portion of corporate decision-making. Most managers spend time on administrative coordination and control, not strategic thinking or problem-solving. Most of those administrative tasks could be handled by AI, Aurik said.

If that happened, what would executives do with all their spare time? Probably spend even more of it at conferences like Davos.

By– Bloomberg

SoftBank in Talks to Back India Insurance Startup

SoftBank Group Corp. is in talks to back leading online insurance aggregator PolicyBazaar at a valuation of at least $800 million, according to people familiar with the matter.

The two sides are examining how the Japanese company can take a stake without pushing foreign investment in PolicyBazaar above 49 percent, the limit under India’s regulatory policies, said one of the people, asking not to be identified because the matter is private. The discussions are still fluid and may not result in a final agreement. The startup’s existing foreign investors, including Tiger Global Management and Temasek Holdings, hold about 48 percent of the startup. It was valued at $500 million in its last funding round, signed at the end of 2016 and finalized a year later.

Yashish Dahiya, PolicyBazaar’s chief executive officer and co-founder, declined to comment on any potential deal, explaining the company has not received any offer. "The [foreign direct investment] cap will not be a challenge as we have firm offers from domestic investors with ready capital who can balance out any foreign investment," he said.

PolicyBazaar is part of a wave of upstarts seeking to challenge the dominance of banks and government insurers in India’s insurance market. E-commerce companies such as Flipkart Online Services Pvt are seeking to push their way in with their own insurance products. The government has kept tight control over the sector where local giants such as Tata Group and Aditya Birla Group exert wide influence.

India’s market potential is immense as the population is largely uninsured or under-insured. Insurance penetration was estimated to cross 4 percent in 2017 and the domestic market is projected to quadruple over the next 10 years from the current $60 billion, according to the government’s Brand Equity Foundation. Demographic factors like a young insurable population and growing middle class will propel the market, the Foundation said.

PolicyBazaar, based in Gurgaon near New Delhi, bills itself as a way for India’s expanding middle class to easily compare policies for life, health and motor insurance, and then choose the appropriate fit, without paying intermediaries.

SoftBank declined to comment. The investor is showing increased interest in the insurance sector and last month led a $120 million investment in the New York-based home insurance startup, Lemonade Inc.

From – Bloomberg

Qualcomm Fined $1.2 Billion as Apple Loyalty Comes at a Price

Qualcomm was fined by the EU for paying Apple to shun rival chips in its iPhones. Bloomberg’s Ian King reports.Qualcomm Inc. spent billions of dollars buying Apple Inc.’s loyalty.

It must now shell out 997 million euros ($1.2 billion) in fines after the European Union’s antitrust arm said the payments were an illegal ploy to ensure only its chips were used in iPhones and iPads.Apple was cornered by Qualcomm with a 2011 deal that offered "significant" sums and rebates if it only bought the company’s chips, the European Commission said in an emailed statement.

“Apple was seriously thinking of switching” from Qualcomm to Intel chips “which would have made a big difference to Intel" but couldn’t do so until its Qualcomm pact was about to expire in September 2016, EU Competition Commissioner Margrethe Vestager told reporters at a Brussels press conference.

“This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were," Vestager said. "We’re talking about one of the biggest and most important customers in this market."

The antitrust fine, the EU’s third highest, comes as Qualcomm tries to fend off a $105 billion hostile takeover by rival Broadcom Ltd. and wages war with Apple in numerous court cases around the world over patent licensing. Qualcomm’s management is under pressure to show shareholders it can manage the Apple dispute and battles with regulators that have already led to fines in China and South Korea.

Qualcomm Appeal

"Qualcomm strongly disagrees with the decision and will immediately appeal it to the General Court of the European Union," the company said in a statement. The EU decision "does not relate to Qualcomm’s licensing business and has no impact on ongoing operations."

Shares in Qualcomm fell 1.2 percent in pre-market trading in New York.

“This is a huge fine by any standards and shows that Commissioner Vestager is starting 2018 very aggressively," said AssimakisKomninos, a lawyer at White & Case in Brussels.

4G Phones

The case focuses on LTE baseband chipsets used in the 4G mobile phone standard. Qualcomm warned Apple that it would cease payments if it sold products using other chips. Vestager said this threat was a key factor for Apple refusing to source from Intel. "It would have cost Apple a lot of money" to quit Qualcomm and it "would have made a big difference to Intel."

“The outcome is that rivals are prevented from challenging dominant companies with more innovative products," Vestager said. The fine represents 4.9 percent of Qualcomm’s revenue in 2017, the EU said.

Vestager said the decision sends a warning to other companies that would contemplate using similar practices: “Don’t go there."

Apple declined to immediately comment. Intel declined to comment.

Qualcomm faces a threat of further fines from a second EU investigation into allegations it deliberately sold internet modem chips below cost from 2009 to 2011 to knock out a rival. EU officials "are still at it with a priority," Vestager said of that case. The EU alleges that Qualcomm aimed to hinder competitor Icera, now owned by Nvidia Inc. That case has escalated with a court dispute over information the EU sought from the company. Qualcomm was threatened with additional daily fines for not quickly supplying data the EU wanted.

There are "no repercussions" for Apple for accepting the deal with Qualcomm and no evidence of wrongdoing by the Cupertino, California-based company, Vestager said.

Wednesday’s decision has parallels with the EU’s 2009 finding that Intel’s rebates to computer manufacturers and payments to a retailer were aimed at squeezing out a smaller chipmaker.

It’s the first time the EU has landed a blow on Qualcomm, nearly a decade after officials dropped a four-year probe in 2009 into how it licensed patents used in the 3G phone standard. There was no fine or any finding that Qualcomm violated antitrust rules in that case.

Apple and Qualcomm have been waging legal battles over the world about the fees Qualcomm charges for its chip designs. Apple says Qualcomm charges too much and is leveraging its strong market position in chips illegally. Qualcomm counters that Apple, one of its largest customers, has lied to regulators in an unfair attempt to bully it into charging less.

From – Bloomberg

Walmart to launch online grocery delivery in Japan in deal with Rakuten

Walmart has struck a partnership with e-commerce firm Rakuten Inc to launch an online grocery delivery service in Japan, its latest effort to forge an alliance with a popular homegrown chain to crack a competitive market.The world’s largest retailer, Wal-Mart Stores Inc, said on Thursday the service will launch in the latter half of 2018.

Walmart’s leadership is looking for new ways to grow its international business, which is no longer the growth engine it once was, as it has grappled with economic woes in Brazil and competition from discount retailers in Britain.

In Japan, the new service will replace Walmart’s existing online grocery delivery offering and will be called “Rakuten Seiyu Netsuper.” Seiyu GK is the name of Walmart’s wholly-owned Japanese unit.It will allow customers to place an order on Rakuten’s online marketplace platform, which will then be fulfilled by the Walmart-Rakuten joint venture. Walmart-Rakuten will open a warehouse to service these orders in addition to using Seiyu stores, the companies said.

Fresh food delivery has been around in Japan for decades but has lagged the growth seen in other areas of e-commerce. Amazon is trialing its “Fresh” service in parts of Tokyo and retailers are trying to beef up their online grocery services.Seven and i Holdings Co Ltd, operator of Japan’s largest chain of convenience stores, last year announced it would cooperate on fresh food delivery with Askul Corp.

Rakuten CEO Hiroshi Mikitani told reporters in Tokyo he hoped the joint effort could lead to cooperation in other areas.“We would like to have an alliance in a broader sense, not just in Japan but for our global businesses,” he said.

Rakuten’s overseas operations include the United States and Europe. And last month it announced it was aiming to become Japan’s fourth major wireless carrier, potentially binding users to its wide range of services.Rakuten’s shares closed up 4.5 percent, paring much of this month’s losses.

In 2016, Walmart applied a similar strategy in China to that announced on Friday after struggling to grow its e-commerce business by itself.The U.S. retailer sold its own website to JD.com, the second largest Chinese e-commerce company, and picked up a 5 percent stake in JD.com instead. JD.com is preparing to enter the United States by the end of this year, Bloomberg News reported on Thursday.

Investment into online grocery services are picking up steam, with Amazon.com Inc buying Whole Foods Market Inc for $13.7 billion last year.Alibaba Group Holding Ltd and U.S. grocer Kroger Co have had early discussions on working together, a source familiar with the matter said.

In South Korea Shinsegae and affiliate E-Mart said they were set to gain $940 million in funding from private equity firms, helping to capitalise on a surge in supermarket chain E-Mart’s popularity due to its quick delivery of fresh products.Walmart is trying to shake up its international business. It recently appointed a top executive to lead its overseas unit and is in talks to sell a stake in its Brazilian operations.

The Japanese deal builds on Walmart’s online grocery delivery efforts in the United States. The retailer is testing grocery home delivery with companies such as Uber, Lyft and Deliv and offers online grocery pick-up at more than 1,100 stores.

The partnership will allow Walmart to sell 6 million e-books and audiobooks offered by Rakuten’s Kobo brand in the United States, giving the retailer a foothold into what has traditionally been a market dominated by Amazon.com Inc.

“We are adding an entirely new category to our U.S. assortment,” Scott Hilton, Walmart’s chief revenue officer for the U.S. e-commerce business, said in a blog post.

From – Reuters

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