Tag Archives: apple

Sprint Pushes Galaxy Forever; AT&T, Verizon Still No Phone Leasing

Wireless firms have stepped up marketing for Samsung’s Galaxy 7 and Galaxy  S7 Edge, which may be the hottest-selling smartphones until Apple ’s ( AAPL ) iPhone 7 hits the market, likely in September. Samsung unveiled the Galaxy 7 devices at this week’s  Mobile World Congress in Barcelona. How consumers pay for smartphones in financing plans sets AT&T ( T ) and Verizon Communications ( VZ ) apart from T-Mobile US ( TMUS ) and Sprint ( S ). For consumers, leasing and monthly installment plans can be similar, especially for those that upgrade and trade in their devices every year. Whether wireless firms are using leasing as opposed to installment plans in promotions, however, brings about changes in accounting that impact earnings and revenue recognition. Sprint on Sunday introduced its “Galaxy Forever”  leasing program , similar to an offering the wireless firm launched last year for Apple iPhones. While Sprint is offering the Galaxy S7 and S7 Edge through both installment and leasing plans, T-Mobile’s near-term marketing focus leans toward monthly installment plans, analysts say. AT&T and Verizon both offer only financing plans with monthly installment payments for iPhones and other devices and do not yet offer phone leasing plans. AT&T and Verizon will apparently stick with that strategy for Samsung’s Galaxy 7 devices. However, some analysts speculate that AT&T or Verizon will begin to offer leasing plans to coincide with the arrival of Apple’s iPhone 7. Both leasing and installment plans make it easier for consumers to upgrade devices. With leasing, wireless firms retain ownership of devices. When consumers turn in old phones, wireless firms sell them into the second-hand market. Verizon will offer a $100 credit to customers that buy the Galaxy S7 and S7 Edge, according to a Wireless Week  report. T-Mobile, meanwhile, is offering customers who preorder the Galaxy S7 or S7 edge a free Samsung VR headset and a free year of Netflix.

China Yanks Western Digital Funds On U.S. Probe; SanDisk Deal At Risk

China’s Tsinghua Holdings pulled its $3.8 billion investment in Western Digital ( WDC ) early Tuesday amid a U.S. government inquiry, prompting the disk drive maker to slash its already threatened bid for flash memory maker SanDisk ( SNDK ). The SanDisk acquisition, announced Oct. 21, will have to hurdle a Western Digital shareholder vote, which would not have been required with the investment by Tsinghua subsidiary Unisplendour. Western Digital stock sank 7.2% to 42.77 on the stock market today , while SanDisk stock lost 1.6% to 66.61. Western Digital Investor Opposes Bid On Monday, Western Digital investor Alken Asset Management wrote an open letter claiming the $19 billion offer for SanDisk was “simply too high.” SanDisk, an Apple ( AAPL ) supplier, faces competitive headwinds in 2016. Alken owns about 2% of Western Digital stock. The vote is slated for March 15. The Unisplendour investment would have given it a 15% stake in Western Digital. Unisplendour terminated its Western Digital investment after the Committee on Foreign Investment in the U.S. said it would investigate. Neither Western Digital nor Unisplendour will pay a termination fee. In December, Summit Research analyst Srini Sundararajan told IBD that Tsinghua Holdings was trying to get its hands on SanDisk technology. Chip-arm Tsinghua Unigroup plans to invest $47 billion in semiconductor technology to become the world’s No. 3 chipmaker, leapfrogging  Qualcomm ( QCOM ). It wouldn’t be the first time a Tsinghua Holdings bid for U.S. technology was shuttered on regulatory concerns. A rumored $23 billion bid for Micron Technologies ( MU ) by Tsinghua Unigroup seemingly fell flat last year on worries that CFIUS would stop the deal. Micron shares fell 5.1% to 10.49. SanDisk Acquisition Remains ‘Compelling’ By terminating its Western Digital investment, Unisplendour triggered an alternative deal between Western Digital and SanDisk. Western Digital will now pay $67.50 per share in cash and 0.2387 in stock for SanDisk, for a value near $78.50 per share at Western Digital’s Monday closing price. The original deal valued SanDisk at 86.50 a share. Despite the failed Unisplendour bid, the demand for data storage is rising, Western Digital CEO Steve Milligan said Tuesday in a statement. By acquiring SanDisk, Western Digital would get easy access to Nand (flash memory). “We believe the strategic rationale of this acquisition is even more compelling today than when we first announced it in October last year, given industry trends and strong execution by both companies,” Milligan said in the statement. The SanDisk deal has been expected to close in Q2. Western Digital said it continues to see $500 million in synergies within 19 months of the closure and $1.1 billion by 2020. If the deal fails, Western Digital must pay SanDisk $184 million. Toshiba Could Benefit Western Digital RBC analyst Amit Daryanani sees the Western Digital-SanDisk deal being 34% dilutive without the Unisplendour investment. The ongoing shift to 3D Nand has pressured average sales prices for SanDisk’s bread-and-butter Nand business, he wrote in a research report. “While we think the long-term rationale of owning HDD (hard disk drive) and Nand under one umbrella is logical, the near-term implications of this could be negative,” he wrote. Needham analyst Richard Kugele notes the $17 billion debt that Western Digital will incur if it acquires SanDisk. But a partnership with Toshiba via SanDisk could buoy Western Digital. Toshiba manufactures SanDisk’s Nand. “Nothing will change the aggressive nature of the Nand industry, but partially owning a fab through the Toshiba partnership should help Western Digital over time navigate those waters,” Kugele wrote in a research report. Daryanani rates Western Digital stock outperform and has a 68 price target. Kugele rates Western Digital stock a strong buy and has a 90 price target.