Settling scores
More breaches, MSFT on a spending spree, and AMZN doing its best.
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Market summary: 📊
Mayday mayday! Brutal Monday in India as investors pack bags over fears of possible lockdowns. US had a pretty flat day ending slightly in the red zone.
US:
S&P 500 - down 0.02%
Nasdaq 100 - down 0.19%
India:
Nifty 50 - down 3.53%
Sensex - down 3.44%
What’s hot, baby? ☕
✅ Breaches breaches everywhere—discount stockbroker Upstox was hit by a data breach, led by notorious hacker-group ShinyHunter. Personal information including Aadhaar, PAN, bank account, and phone numbers of more than a million users was compromised. This is the second Indian fintech startup in a row to be affected, after MobiKwik’s fiasco a few weeks ago. Upstox claims user's cash and shares are safe though, but that’s because stock is usually held by respective depositories. Bruh!
✅ Levi’s leaves some clues—the Levi’s Strauss Jeans Company ($LEVI) saw its stock pop nearly 10% over the last 2 days after the company raised its business performance outlook for the first half of 2021. Basically, the business expects consumers to get into a revenge spending spree, which also reads quite positively for apparel and consumer merchandise brands across the table. If 2020 delivered a surprise booster for software businesses, consumer brands are placing dibs for 2021.
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Still settling scores 💪
After ruining Ant Group’s party, relentless China went on to slap Alibaba, Jack Ma’s other company, with a record $2.8 billion fine.
Usually when fines run in the billions, it's a foreign company that’s at the receiving end of the beating, but China slapping its own bellwethers in the midst of a global tech war? So weird.
Anyway, a probe was launched on the back of new anti-trust regulations back in November, just when China kicked off its full blown crusade to take down Ma, and this is probably the first full scale judgement displaying the extent of the law.
Specifically, the ruling claims Alibaba’s been forcing merchants to sell exclusively on its platform since 2015, while using data and algorithms to mine merchants' performance and create an unfair competitive advantage for its own products.
Meanwhile, Amazon’s chuckling in the corner.
Meek Alibaba, stripped of its fighting power minus the firepower of its founder, responded apologetically, accepting the fine and promising to mend its policies.
What matters: the fine amounts to about 3.5% of $BABA’s revenues, which isn’t a lot for a one-time hit. And honestly, the markets were just waiting for China to just get through with this, for the stock to finally have all weight lifted and show some life.
It’s a hot world in semis 💪
Ongoing global chip shortages have lit up the semiconductor market like never before, and the giants are scrambling to make the most of the tailwinds.
GlobalFoundries, one of the largest contract semiconductor manufacturers, which basically manufactures high-end chips for other semi companies, is planning a $20 billion IPO.
Stuff that matters:
GlobalFoundries competes with the industry’s largest contract manufacturer Taiwan Semi (TSMC), which recently promised $100 billion in investments to deal with semi shortages, and compete with Intel
Abu Dhabi government’s wealth fund, the Mubadala Investment Corp., owns majority of GlobalFoundries and is set to make a windfall after the IPO
GlobalFoundries made $5.7 billion last year, but growth is expected to easily top 10%+ this year as semi prices go up, and demand peaks
What matters—a $20 billion IPO in software or consumer tech may barely qualify as news anymore, but in the semiconductor world, it's not routine. 5G chips, IOT, automotive chips, smartphones and devices—the multitude of tailwinds supporting the industry, combined with COVID’s impact here is making this game superhot.
Microsoft’s getting pretty aggressive around here... 🙄
The OG of enterprise software is spending $19.7 billion on acquiring AI & speech processing company Nuance Communications, making it MSFT’s second most expensive acquisition so far.
Now that’s amidst ongoing talks to acquire gaming-chat service Discord for $10 billion.
Nuance most notably uses fancy AI to simplify medical processes and systems for healthcare services, serving clients from insurers to hospital providers to capture doctor-patient interactions, post care processes, paperwork, monitoring, testing, and other record keeping.
Microsoft is hoping to beef up its portfolio of cloud products for the healthcare vertical, most importantly in simplifying doctor-patient interactions and record keeping, which is a notoriously wasteful exercise with lots and lots of room for adoption of cloud technology.
And it's thoroughly amusing how Nadella spends billions like its peanuts and barely gets any pushback from the markets or the regulators—thanks to all the credibility the man earned turning around $MSFT over the better part of the last decade.
Fun fact? Nuance helped develop Siri, the not-so-smart assistant on Apple’s iPhone, but we won’t judge them by the wits of that product alone.
While we’re here,
Online cosmetics platform Nykaa acquired a digital jewelry brand Pipa Bella, amping up its portfolio of self-owned fashion and accessory labels. No deal amount was revealed.
Pipa basically targets young urban women, selling a portfolio of over 1,500 styles of jewelry, attacking the value-for-money sweet spot. Nykaa can directly plug the brand into its wide distribution network, diversifying its revenues, while easily supplementing its revenue base, while appearing a bit more mature and diversified for its looming date with public market investors for an IPO. Sweet, easy fit!
Meeting of the unusual minds 🤝
Flipkart will be working with the Adani Logistics Group, to build out a state-of-the-art fulfillment centre in Mumbai, helping Flipkart scale ops and meet demand in an asset light manner.
The facility is quite a feat—spread across a whopping 5.34 lakh square feet and employing 3,500 workers. The entire space will be leased out by Flipkart, and will be ready to go live in the third quarter of FY22.
What matters: as penetration of e-commerce rises in India, the need for third-party logistics and managed warehousing services is only going to explode.
Although Amazon-like self-owned global delivery network would be ideal, not every ecommerce company has the cash or the gall to match Bezos’ ambition. This opens doors for third-party vendors like Adani to capitalize on the emerging need for infrastructure.
Ah also... as part of this cozying up between Adani and Flipkart, the latter will also be setting up its next giant datacenter at Adani’s ConnecX facility in Chennai—that’d be Flipkart’s 3rd large scale datacenter in India.
We’re closely watching this live-in situation.
What else are we snackin’ 🍿
💉 Doing their best - Amazon India will be covering vaccination costs of over 10 lakh people part of its operations network, including delivery service associates, Amazon Flex drivers, trucking partners as well as their eligible dependents. Other giants take some lessons pls!
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