Lots of high-tech news and noise in the market in the past couple of days. In that environment, it's easy to miss important stuff that can help make you money. Here are four deals that have been reported, but not sufficiently examined in the usual print and online media ... and what I think they mean:
have announced that Dell's ponying up a cool $200 million to buy convertible bonds in the South Korean tech giant. And also signing a contract to buy $8.5 billion -- yep, billion with a "b" -- of Samsung's active-matrix LCD panels over the next five years.
Tell us what you think on
Active-matrix LCD panels are the hottest display technology around now. Older, dimmer, duller technologies just can't compete with the TFT (thin-film transistor) active-matrix technology. But they're a bear to make, with limited production, due in large part to LCD makers' inability to get many panels from a single "die," or whole-sheet substrate of manufactured LCDs, and a very low yield rate.
Samsung's tackling both die-size and yield problems with a new plant it'll help build with the Dell money. The new one, opening in 2001, will turn out relatively huge 730 x 920 millimeter substrates, which (theoretically) will net six 17-inch active-matrix panels per. (That assumes a 100% yield, which is of course still unrealizable. Get five per and they'll be doing very, very well.)
The deal is intended to buy Dell an inside track on LCD-panel supplies.
PC manufacturer is hurting for more LCD capacity, especially after the Taiwan earthquake last month. Dell has been "shipping-constrained" (isn't that a great term for "can't make 'em fast enough"?) on some of its notebooks, especially those with 13.3" screens. And over the next couple of years we're going to see the demand for larger LCD displays skyrocket, as more and more of us replace our desktop CRT displays with sharp, thin, cool-running, energy-saving LCD displays.
Dell wants those big ones, too, and was clearly willing to pay a ... umm ... bribe? ... to get at the front of the line and assure that it can stick to its JIT (just-in-time) production model.
Dell wasn't first, though:
bought $100 million worth of Samsung convertibles three months ago. Fair question: Is there a kind of implicit PV/FV calculation here, in which $100 million three months ago beats $200 million today?
What it means:
Smart, smart move by Dell, putting some of its cash hoard to work to lock-up future supplies of a critical component. Dell looks better and better every day, and I'm beginning to think it will dodge the bullet on corporate computing purchases delayed by Y2K fears 'til after the first of next year. Dell sure feels like a great long these days... .
Didja hear about the deal between
? AOL plunked down an unspecified amount of cash -- and I can't find anyone who'll slip me the number -- to open AOL kiosks at Universal's new
Islands of Adventure
theme park in Florida.
Universal's visitors will be able to stroll up to these kiosks and check their AOL Mail. They can also get coaching in using the service, and -- surprise, surprise! -- information about how to subscribe. Why, gosh, you know I expect they'll even be able to sign up on the spot!
Damn, but AOL management is consumer-smart.
What it means:
Yet another positive for AOL. Another promising long these days.
While all the talk stateside is about whether
is in play or not, Annunziata's Army just made a smart acquisition itself, in Britain.
By buying the telecom business of
for about $1.65 billion -- in an all-cash deal -- Global Crossing bought a great land-side extension of its undersea business to the U.K. for what I think will be seen in a year or two as one hell of a bargain.
, in a fast-closing deal not exactly characteristic of the more reserved world of British dealmaking. Which may explain why, in addition to the $350 million premium Global reportedly paid over the Energis offer, Global won the contest.
(There's some egg on the face for Energis in this; it's been telling analysts and reporters that the deal was nearly done. Don't miss the great heads-up
a month ago from Nick Watson,
U.K. correspondent. Nick's prescience was right on the button, when he said Racal would have a lot of explaining to do on this deal. Just maybe a different kind of explaining.)
Racal's high-speed telecom network is buried alongside the tracks of
. Sounds like the strategy of
-- which I am long -- and pipes right into the heart of U.K. population centers and telco exchanges.
What it means:
A great move for Global Crossing, ultimately much less expensive than it looks today. This kind of deal is essential to becoming the kind of world-scale player Global CEO Bob Annunziata says he wants GBLX to be: Smart, fast, effective dealmaker. Yet another good long, sez I.
Finally, an interesting play in the
dominance is getting serious challenges. Tim O'Reilly, the sharp CEO of computer book-publisher
O'Reilly & Associates
and a friend of mine, put together a deal with
to co-publish a book-CD package of
, a Linux variant.
VA Linux is of course now in registration for what it hopes will be the
Son of Red Hat
-- an explosive Linux-related IPO -- later this year. I don't see that kind of opening action for the issue, let alone Red Hat's kind of continued stock-price growth for VA Linux, but it will be an interesting IPO, and one worth getting into, if you can lock up some shares with a friendly broker now.
The Debian package will sell for $19.95, and brings Red Hat's notion of Linux with real documentation to VA Linux's table.
The real trick here, though, is that O'Reilly and VA Linux say they'll turn all their profits on the package over to
Software in the Public Interest
, a fund for support of co-called "open source" projects. The partners, predictably if not a little sanctimoniously, say this is their way of "giving back" to the Linux community. Um-hmm.
There is a growing (and, yes, sometimes anarcho-puzzling) trend in the Linux world to condemn Red Hat for having the nerve to find a way to make a buck off Linux. This is a community, remember, that sees Microsoft as the ultimate Evil Empire, and is, to put it gently, sometimes very wary of the notion of capitalism. At least, as applied to software.
So the O'Reilly/VA Linux move to deliver their profits to a fund for supporting still other open-source (and, presumably, free or near-free) software products neatly exploits Red Hat's discomfort.
What it means:
This certainly isn't a fatal blow to Red Hat, nor even a knee-capping. But it does put out there an alternative to Red Hat Linux that comes complete with rich documentation ... and -- read the fine print, please -- a very nice revenue opportunity for VA Linux, which says quietly that it will,
, sell support services to Debian users.
Which is, of course, exactly Red Hat's hope, as well. Ahh, the for-profit twists and turns of the nonprofit software world.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, Seymour was long Qwest, although positions can change at any time. Seymour does not write about companies that are, or have been recently, consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at