Intel, Broadcom, Qualcomm Buzz Has A Lot To Do With Apple; S&P 500, Dow Jones Futures | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 were slightly higher Sunday after the major averages rallied strongly last week. Chip stocks fueled the Nasdaq composite’s drive to a new high Friday, and they’ll stay active Monday, following a report that Intel (INTC) could bid for Broadcom (AVGO), which is mounting a hostile bid for Qualcomm (QCOM), which in turn in is trying to close a deal for NXP Semiconductors (NXPI). All four chipmakers are Apple (AAPL) iPhone suppliers, with Intel’s hopes for further Apple contracts at risk from a combined Broadcom-Qualcomm.


S&P 500 index futures climbed nearly 0.2% above fair value. Dow Jones futures rose 0.3%. Nasdaq 100 futures were up 0.2%.

On Friday, the S&P 500 and Dow retook their 50-day moving averages on Friday. The Nasdaq composite soared 4.2% for the week. Several top-rated chip stocks have broken out to buy zones, as semiconductors have powered ahead.

Intel could mount a Broadcom bid if it appears that Broadcom is close to sealing a Qualcomm deal, the Wall Street Journal reported late Friday. It would be a defensive move. Intel modem chips are now being used in some iPhones instead of Qualcomm, which is in a major royalty fight with Apple. Intel could win more work in upcoming iPhone models, but a Broadcom-Qualcomm could mend fences with Apple.

Broadcom shares jumped more than 3% Friday night to 261.78, after briefly trading around 270. Intel and Qualcomm shares edged lower in late trading. NXP Semiconductors stock inched higher.

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Intel-Broadcom, Broadcom-Qualcomm Deal Hurdles

An actual deal between Intel, the world’s largest chipmaker, with the big-cap Broadcom would likely raise huge antitrust concerns, with a lengthy, uncertain regulatory process and complicated divestitures. Intel would likely have to offer a big premium to Broadcom’s price. And the lean-running Broadcom would offer few easy areas for Intel to pare costs.

Meanwhile, Broadcom’s Qualcomm quest faces longer odds now that the Committee on Foreign Investment in the U.S. has raised national security concerns about such a deal. Broadcom is moving its headquarters from Singapore to the U.S., but that may not be enough.

Qualcomm’s board has resisted the deal, spurring Broadcom to mount a proxy fight with its own slate of directors. Qualcomm shareholders are due to vote on the rival slate at the company’s annual meeting, with some reports stating that Broadcom was expected to win. The meeting was supposed to take place March 6, but CIFUS ordered a delay of at least one month.

Qualcomm-NXP Semi

Qualcomm in turn is trying to buy NXP Semiconductors. The Dutch chipmaker is an Apple supplier, but its biggest role is in automotive chips. Qualcomm agreed to buy NXP Semi for $110 a share back in October 2016, but struggled to win over key NXP investors. On Feb. 20 Qualcomm raised its NXP offer to $127.50 a share, or $44 billion.

That in turn spurred Broadcom to modify its Qualcomm offer. It’ll pay $79 per share for Qualcomm if Qualcomm buys NXP. If there’s no NXP deal, Broadcom’s offer remains $82.

Intel also could make smaller acquisitions as an alternative to Broadcom, the WSJ reported.

Intel, for its part, said late Friday that it would not comment on the Broadcom speculation but said it’s working to integrate its recent Altera and Mobileye deals.

Intel shares hit a record high last week, clearing a short consolidation that was too short to be a proper base. Broadcom retook its 50-day and 200-day moving averages on Friday, a key step as it starts to build the right side of a consolidation going back to late November. But Broadcom’s relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been lagging for several months and is near 52-week lows.

Qualcomm shares, which shot up in November on the initial Broadcom offer, has been struggling in the past several weeks.

As for Apple, shares rose 1.7% to 179.98 on Friday, just below a 180.71 high-handle buy point in a V-shaped cup base.


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Originally posted 2019-09-19 23:10:48.


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