NEW YORK (
(INTC - Get Report) and
(VZ - Get Report) forged an imaginative transaction that turns out to be a win-win for both companies.
Last week's deal, plus Verizon's planned acquisition of the part of Verizon Wireless it doesn't already own, will put the company head to head against such competitors as Netflix (NFLX).
Who would have thought the combined imagination and financial prowess of Verizon and Intel would complete a deal that gives Intel a much-needed cash infusion and Verizon some precious technology to be able to offer an online pay-TV service?
On Jan. 21, Verizon and Intel announced VZ will buy the intellectual property rights to Intel's TV technology. The purchase price was approximately $200 million, and with Intel's latest struggles to increase income and revenue that would turn out to be a hefty shot in the arm while calming the fears of some investors who wonder if Intel will be able to raise its dividend payout sometime soon.
The official INTC press release revealed just enough to confirm rumors that had been floating around. The deal, it says, will "accelerate the availability of next-generation video services, both integrated with Verizon FiOS fiber-optic networks and delivered 'over the top' to any device. Verizon will purchase intellectual property rights and other assets that enable Intel's OnCue Cloud TV platform."
The deal is expected to close early in the first quarter of 2014, which would imply well before March 31. Lowell McAdam, chairman and CEO of Verizon, said the deal "provides us with the capabilities to build a powerful, capitally efficient engine for future growth and innovation. We will have the opportunity to enhance, expand, accelerate and integrate our delivery of video products and services to better serve audiences on a wide array of devices."
Translated another way, this huge, imaginative leap empowers Verizon, with that Verizon Wireless buy from Vodafone (VOD), to eventually compete against Netflix as well as Amazon.com (AMZN), which are busy trying to launch their own versions of this TV technology.