Today's Market: M&A, Smart Watches And Rights Negotiations

by: Matthew Smith

With the merger and acquisition business picking up in the last month we were not surprised to see more and more people discussing BlackBerry (BBRY) in recent days, especially after the deals in the telecom sector in the past few days. What we were surprised about was that the company is apparently moving up the timeline that they have for a potential buyer to step up to the plate. Trying to create some urgency might help with a sale, however it might also deter someone from making a bid. Forcing someone's hand usually leads to a lower premium, at least that is our experience, so shareholders need to look at this from all of the angles. Our overall view of the potential for a deal remains pretty bleak and the view is even bleaker when looking at whether a big premium is paid to shareholders.

Chart of the Day:

The situation in India continues to get worse and the currency continues to weaken. It is volatile and moving strongly lower and when momentum is taking you that way it is usually smart to get out of the way and let the market bottom out before making a move. That is what we would recommend in this case. There is no trade here until the chart shows some sideways movement and the politicians in India enact some smart reforms.

(Click to enlarge)

Source: Yahoo Finance

We have economic news today and it is as follows:

  • Challenger Jobs Cuts (7:30 a.m. ET): Est: N/A Actual: 56.5%
  • ADP Employment Change (8:15 a.m. ET): Est: 180k Actual: 176k
  • Initial Claims (8:30 a.m. ET): Est: 333k Actual: 323k
  • Continuing Claims (8:30 a.m. ET): Est: 2977k Actual: 2951k
  • Productivity - Revised (8:30 a.m. ET): Est: 1.5% Actual: 2.3%
  • Unit Labor Costs (8:30 a.m. ET): Est: 1.0% Actual: 0.0%
  • Factory Orders (10:00 a.m. ET): Est: -3.7%
  • ISM Services (10:00 a.m. ET): Est: 54.5
  • Natural Gas Inventories (10:30 a.m. ET): Est: N/A
  • Crude Inventories (11:00 a.m. ET): Est: N/A

Asian markets finished mixed today:

  • All Ordinaries -- down 0.35%
  • Shanghai Composite -- down 0.24%
  • Nikkei 225 -- up 0.08%
  • NZSE 50 -- down 0.13%
  • Seoul Composite -- up 0.96%

In Europe, markets are mostly higher this morning:

  • CAC 40 -- up 0.25%
  • DAX -- up 0.18%
  • FTSE 100 -- up 0.34%
  • OSE -- down 0.08%


Yesterday we got our first look into the smart watch products which are set to be launched this year and to put it simply they were unimpressive. Samsung's product was clunky and according to the one techie who we saw on TV that had played with the product it sounded as if little thought went into the design of the watch to make it female friendly. One could only hope that the watch will come in different sizes, but at this time it appears that that will not be the case.

The surprise announcement yesterday had to be from Qualcomm (NASDAQ:QCOM) which is launching a smart watch, the TOQ, in order to highlight the firm's technology and hopefully sell it. The battery life is supposed to be key with these products but the one sticking point we keep finding is that the watches need to synch with a smartphone. Although it has yet to be seen, our guess is that Apple (NASDAQ:AAPL) designs a much more consumer friendly version of the smart watch (or should we call them dumb watches because of their need to synch with a smarter device) which is more appealing to the female pallet and therefore should garner a larger audience. We are much more excited to see what Apple has to offer now as opposed to a few days ago simply because it is our view that the bar has been set pretty low by competing devices.

On a side note about Apple, there is speculation that the company is set to launch the iPhone through China's largest carrier which pushed both stocks higher yesterday. That would certainly be welcomed news as it would overnight open a huge market up for Apple and further build upon the success that the company has enjoyed in the country already. These are two stories to keep in mind moving forward.


We would be betting on Disney (NYSE:DIS) to win higher fees, especially for their broadcast stations, however Dish (NASDAQ:DISH) is a wild card in the industry and one never knows what they will do.

(Click to enlarge)

Source: Yahoo Finance

After the most recent fight over fees charged by content providers to the cable and satellite operators it appears that both investors and consumers will receive an encore performance from two of the biggest names in their respective industries as Dish Network and Disney enter negotiations over the fees that Dish pays Disney for all of its channels, including the ESPN family of channels and ABC stations which are retransmitted. Call it gamesmanship or a bluff, but Dish is on record as saying that they want to get a fair price out of these negotiations and if they cannot reach a fair price that they would simply drop the Disney channels altogether (see article here from The Wall Street Journal). This is what many in the industry have dubbed "the nuclear option" and to this day we have not seen it implemented over a large system and pertaining to such popular properties. If this is the way that Dish decides to proceed we are quite interested in watching how this plays out. Does the Justice Department and FCC simply allow it to happen or do they jump in? Does Disney lower their asking price to ensure that ESPN and their other lucrative properties do not lose audience? Or, at the end of the day is Dish simply bluffing and hoping to get a better price out of negotiations with Disney? Only time will tell.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.