1. Sprint parent SoftBank is set to buy the intellectual property behind the processors inside most of the world’s smartphones. The Japanese company is paying roughly $32 billion for ARM Holdings, the British company that designs the cores inside most of the processors built by Qualcomm, Samsung and other makers of smartphone chipsets.
The boards of both companies have agreed to the deal. According to the Financial Times, SoftBank chairman Masayoshi Son has pledged to add 1,500 new jobs at ARM, which currently employs about 4,000 people. Son has reportedly discussed the acquisition with UK prime minister Theresa May and chancellor of the exchequer David Hammond.
SoftBank is paying a significant premium to ARM’s pre-deal market valuation, but the Japanese company is helped by the fact that the yen has appreciated against the British pound in the wake of the UK’s decision to leave the European Union.
SoftBank will be acquiring a company that is poised to translate its leadership in the smartphone arena to the Internet of Things. ARM is positioning itself as a provider of highly secure, low-power solutions for IoT applications.
ARM will be the latest in a long string of SoftBank acquisitions. In addition to its majority stake in Sprint, SoftBank owns a controlling interest in Brightstar, Supercell and Yahoo Japan.
2. Yahoo reports earnings today, and is also scheduled to receive its next round of bids from parties interested in buying the company. Verizon is thought to be the only remaining strategic buyer in the race. The company wants to combine Yahoo and AOL to create a major digital advertising platform. AT&T was reportedly evaluating a bid but is not expected to continue. Verizon’s primary competition is likely to come from private equity interests.
3. Ericsson is denying claims that its method for reporting sales is misleading. A Swedish newspaper published a story saying Ericsson is recording sales before they are invoiced. Ericsson said that its methods are completely in line with accounting rules, and that it does not report sales unless “collection is reasonably assured.” The company reports earnings tomorrow.
4. Samsung is said to be in talks with Chinese electric car maker BYD, which is backed by Warren Buffett’s Berkshire Hathaway. The world’s leading smartphone maker, which also manufactures semiconductors and wireless base stations, may invest in BYD as a way to insure a market for its connected car solutions.
5. South Korea may hit Qualcomm with a fine of more than $870 million. The nation’s Fair Trade Commission has been investigating the chip company for more than a year, and has found that Qualcomm continues to charge licensing fees that the commission considers unfair. Qualcomm has two primary businesses: designing chips for mobile devices and licensing intellectual property to other chipmakers. In 2009, South Korea fined Qualcomm more than $200 million.
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