Lenovo's Acquisition Spree; Vodafone Sells Back

Lenovo recently acquired IBM’s low server business ($2.3 billion) and Motorola Mobility from Google ($2.9 billion), wrapping the two deals up within a week. Lenovo is known for surpassing HP as the largest maker of personal computers; however, the PC market is in steady decline. This acquisition falls into Lenovo’s PC plus strategy—expanding into the international smartphone market with Motorola’s global brand (90% of Lenovo sales are from China). However, Lenovo is going to have to integrate Motorola, which reported losses of 384 million in their last quarter, and the servers that they hope will drive innovation and value in system and software areas such as cloud and cognitive computing, instead of just hardware. This is important in a market where several tech giants are phasing out low end servers for high end servers that can handle more complex tasks.

Vodafone recently approved the sale of its 45% stake in Verizon Wireless, returning $84 billion to Vodafone shareholders; the largest single return of value to shareholders in history. Verizon Communications now has complete ownership of its wireless industry, at the cost of $130 billion, the third largest deal in corporate history. Verizon executives assert that the purchase will give them the financial flexibility to invest in new mobile technologies. Verizon shares were down one cent at $47.68 on the New York Stock Exchange after the news. Vodafone shares closed roughly flat at 223.44 pence in London. After AT&T announced that it was not in talks to buy Vodafone (valued at more than $100 billion) and trading on Vodafone stock dropped 4% in London. Analysts are divided over whether Vodafone can prosper on its own or whether it is better off as a takeover target, especially as the European telecommunications sector faces regulatory uncertainty.
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Brandon Nesfield

Amazon Considers Adding TV Service

Can Amazon successfully integrate
an online television service?

Amazon.com Inc., the world’s largest online retailer, is looking to begin an online pay-television service. The company has approached many U.S. media companies in order to acquire the rights for these services, according to the Wall Street Journal. This plan, as stated by unidentified sources with knowledge of the situation, is in it’s early stages but would look to expand upon the existing Amazon Prime service by giving viewers the opportunity for live programming. This would put Amazon in competition with traditional pay-television providers. Prime Instant Video is currently free for customers who are a part of Prime’s shipping subscription plan. Currently, the service offers thousands of shows and movies that are accessible on the web, in a very similar manner to Netflix.

If this advancement does indeed occur, Amazon would join Sony Corporations and Verizon Communications as the only American companies with intent to create Internet based television businesses built to challenge the customary cable providers. Previous efforts of this nature have been hindered by content providers who are dependent on their wildly profitable deal with cable and satellite providers. Many major media companies are hesitant to allow online video services the access to their rights for live streaming for mainstream events like significant sporting events. Amazon has denied the Journal’s reports recently, with spokesman Drew Herdener saying in an email to USA Today, "We continue to build selection for Prime Instant Video and create original shows at Amazon Studios, but we are not planning to license television channels or offer a pay-TV service."
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Francis Luby