Bundle of investment news: Intel extension and flight subscription

Пачка инвестновостей: расширение Intel и подписка на полеты

Intel buys Israeli semiconductor manufacturer. Alaska Air Group wants to capitalize on the introduction of a subscription.

Disclaimer: when we talk about, that something has grown, we mean a comparison with the same quarter a year earlier. Since all issuers are from the USA, then all results in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.

Childe-Pat reached the semiconductor tower: Intel buys Tower Semiconductor

Embedded device manufacturer Intel (NASDAQ: INTC) announced the decision to buy the Israeli manufacturer of silicon wafers Tower Semiconductor.

Here are the deal details:

  • Tower buy at a price 53 $ per share - with premium 60% to the price of Tower at the time of the news about the deal;
  • in absolute terms, buying the Tower will cost Intel $6 billion;
  • Tower take from P / S — 3,82 and P / E — 37,32.

Tower occupies 1% silicon wafer market. According to Intel CEO Pat Gelsinger, the purchase of Tower will allow Intel to build its own successful silicon wafer business for more than just its products, but also for other companies.

Tower manufacturing facilities are located in the USA, Japan and Israel. Think, this played a prominent role in the decision to buy the company: now Western companies are striving for the most part to withdraw production away from China.

Company sales geography, according to its annual report, looks like that: 44% — USA, 28% - Japan, 22% – other Asian countries, 6% - Europe.

Tower does not have a very large debt load - 615.812 million, of which 276.328 million must be repaid during the year. She has enough money at her disposal.: 210,93 mln on accounts plus 142.228 mln debts of counterparties and 363.648 mln in short-term deposits. This was also a bonus for Tower in the eyes of Intel management.: during the period of raising rates, it would not be very useful to collect even more debt.

Пачка инвестновостей: расширение Intel и подписка на полеты

Пачка инвестновостей: расширение Intel и подписка на полеты

Investors greeted the news about the purchase of Tower without much enthusiasm - and later, when Intel published its business outlook for contract manufacturing of wafers for other companies, its shares fell by 7%.

In principle, there was nothing terrible in these plans - just the company's efforts to develop the "plate business", according to forecasts, will bear fruit by 2024-2025, and until then, the indicators will remain fairly stable, no sharp growth. In my opinion, investors underestimate Intel and once again show their limitations: Intel is inexpensive, and the plate business is very marginal and promising.

  Morgan Stanley analyst

It is worth noting, that Tower shares are currently trading at 46,94 $ - this is below the price of its purchase by Intel. Seems to be, investors do not fully believe, that the transaction will take place, and expect opposition from antitrust regulators. But that should not stop us from looking for low-cost semiconductor businesses with the expectation that their prices will rise in case of news that, that someone buys them.

Yet the current chip boom is different from those cycles, what came before:

  1. Companies are now looking to buy more semiconductor components for the future., to avoid shortage problems.
  2. High-tech products themselves are becoming more demanding in terms of the presence of a large number of chips.. It turns out, that in later years the machine, gadgets and other technology will contain even more chips.

In other words, crisis of overproduction of chips if it comes, then, probably, much later, than many people think. So,, large spending on R&D and business expansion in this area will only increase.

Flying American: airlines are testing a subscription model

American airline Alaska Air Group (NYSE: ALK) is going to try out the introduction of a subscription in his business: different fixed price plans, that will allow its customers to fly, using its airlines a certain number of times.

Cheapest Flight Pass Plan Costs 49 $ per month - for this money you can fly 6 once a year, but each ticket must be booked for 14 days before departure. Other plan, Flight Pass Pro, will cost 199 $ per month, but the ticket there can be booked already for 2 hours before departure.

This, certainly, Not all, what travelers need to pay: they are also waiting for various fees and taxes, up to 14,6 $ for the flight. In total, different ALK plans will give for a subscription the opportunity to make 6, 12 or 24 round-trip travel per year.

The subscription is distributed to a limited number of regions - in fact, it is designed for flights from California to Nevada and Arizona. So for now, this is just an experiment - a fairly large-scale one., but still it is not a federal level.

And yet the ALK experiment deserves the closest attention as investors, and other airlines.

  a little apocalypse;)

The subscription business model gives it greater resilience provided, that a critical mass of subscribers do not use their subscription too actively, otherwise the subscription brings losses to the company. Considering, that the coronavirus crisis has seriously battered airlines and continues to, to put it mildly, dampening effect on their financial performance, the introduction of a subscription may become quite common among airlines.

And it's very possible, that this news will greatly please investors, because airlines now look completely undervalued compared to cruise lines, despite a tangible improvement in the flight situation.

Пачка инвестновостей: расширение Intel и подписка на полеты

Пачка инвестновостей: расширение Intel и подписка на полеты

Пачка инвестновостей: расширение Intel и подписка на полеты

Пачка инвестновостей: расширение Intel и подписка на полеты

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