Today's Market: Tech Companies Develop New Markets And Acquisitions Announced

|
Includes: AAPL, BA, CVS, FB, GOOG, GOOGL, INTC, TGT
by: Matthew Smith

Summary

Tech companies continue to seek out projects to help 3rd world countries while also focusing on social issues and developing new markets.

The Paris Air Show is underway, with Boeing and Airbus once again announcing a flurry of orders.

CVS Health is purchasing Target's pharmacy and clinic business for $1.9 billion.

Markets are once again lower on Greece's decision to take a hard stance in negotiations and demand that they receive some sort of debt relief from this round of bailouts. The Germans and their allies are not the least bit entertained by the latest moves by the Greeks and it appears that the patience of both the EU and IMF are at a breaking point. It has been announced that Greek leaders have called for an emergency meeting, realizing that they may have overplayed their hand this go-around while at the same time remaining defiant publicly. If Greece bites the hands that feed them by declining to stick by their word, we could very well see their partners push them into default and allow market forces to show Greece what is fair in debt negotiations.

We doubt that this moves that far, because it would wreck serious damage upon the Greek economy and set it back a decade. Politicians should also realize that a slight cut to pension benefits is not near as bad as large, permanent cuts to pension benefits and when it comes down to it, that is what this is all about.

Chart of the Day:

Once again the German market is getting hit by the Greek news, but the German Bund market is moving higher as investors seek safety in Europe.

Source: CNBC

We have economic news today, and it is as follows:

  • Empire Manufacturing (8:30 a.m. EST): Est: 6.0
  • Industrial Production (9:15 a.m. EST): Est: 0.3%
  • Capacity Utilization (9:15 a.m. EST): Est: 78.3%
  • NAHB Housing Market Index (10:00 a.m. EST): Est: 56
  • Net Long-Term TIC Flows (4:00 p.m. EST): Est: N/A

The Asian markets are lower today:

  • All Ordinaries - down 0.12%
  • Shanghai Composite - down 2.00%
  • Nikkei 225 - down 0.09%
  • NZSE 50 - down 0.46%
  • Seoul Composite - down 0.48%

In Europe, markets are lower today:

  • CAC 40 - down 1.25%
  • DAX - down 1.57%
  • FTSE 100 - down 0.94%
  • OSE - down 1.51%

Tech Companies Continue To Seek Energy Investments

CNBC has an article on their website discussing reports that Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is interested in becoming an investor in the Lake Turkana Wind Power Project in Kenya. The project will be massive, spanning 40,000 acres and ultimately boosting electricity production in Kenya by 20%. The Lake Turkana Wind Power Project will cost $700 million and will bring electricity to a country and continent which badly needs it.

Now companies such as Google and Apple (NASDAQ:AAPL), which has also sought out clean energy projects to invest in, will tell you that their goal is to do some good with their cash, and make no mistake, they are, but these moves are also profit motivated. Just as other tech companies such as Intel (NASDAQ:INTC) have helped develop lower cost tech gear to expand the market, the latest wave of tech companies is now looking at the basic needs of the world and moving to supply those needs in order to expand their markets. It is impossible for many in Africa to get access to the internet and use sites such as Google and Facebook (NASDAQ:FB) when they lack the basic foundation of services such as electricity and internet access.

So while we are in the camp of investors who would love to see the tech giants invest in projects with rich margins, we are also among those who understand that this is a long-term strategy being deployed to expand markets and build brand loyalty and/or awareness. Expect to continue to see stories regarding tech companies' investments in various power generating projects and cheap Wi-Fi deployment for these reasons.

Paris Air Show

Expect a lot of order announcements from Boeing (NYSE:BA) and its rivals as the Paris Air Show has kicked off and manufacturers typically like to stockpile orders to announce amid the media bonanza and claim the title of most sales from the show. It happens not only in Paris but at all of the other major air shows around the world, however this event is significant because Boeing's main rival, Airbus, is European and this event takes place in their back yard.

Investors can also expect to get a feel for where the industry is heading based on what customers want, however the trend over the past couple of years will probably continue with Airbus arguing for larger jets while Boeing sticks to its thesis that airlines want more energy efficient planes which are a bit smaller.

CVS Buying Target's Health Business

In another interesting move, CVS Health (NYSE:CVS) has announced that it will purchase Target's (NYSE:TGT) pharmacy and clinic business which has 1,660 locations across the United States. The transaction will result in Target now having stores within a store, as CVS will manage the pharmacies and clinics as CVS locations and not as Target locations.

The deal calls for CVS to pay Target $1.9 billion and will boost CVS's presence in 47 states.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: AAPL and BA have previously been recommended.