Trump “Saves” Qualcomm
Dear Rundown Reader,
Big news from the White House this week. President Trump steps in and squashes the proposed Broadcom takeover of Qualcomm. Today, the details.
First, enormous response to Monday’s question: Do you trust your doctor?
Your letters, below. See if you can find the theme.
“Who do I trust? Only myself.”
“Unfortunately the majority of Americans have not been educated to understand our healthcare system is a business first, and that most doctors are average or below average in their ability to diagnose and treat a patient.”
“I trust me the patient in healthcare. Everything else is suspect. I am a 73 year-old retired physician.”
“The answer is, I am responsible for my own healthcare decisions. As is often said in business, one can delegate authority, but not accountability.”
“I trust the doctors more than the insurance companies but believe in trust but verify.”
“Efficiency became all important and there was little time for doctor / patient interaction. Years ago I trusted my doctor, but not so much anymore.”
“Doctors that you can trust are the exception these days, not the rule. As for your health insurance provider, they are in business to make money which means they are not looking out for your best interest.”
“No, I do not trust doctors in today’s medical system. It is drug them and forget them.”
“Not in this life. I can count the people I trust on one hand.”
Now, the next question: If trust is lacking across the board – insurance companies, drug companies, hospitals, doctors – how do you fix healthcare?
We’ve talked about this before. Let’s nail it down this time. Imagine you have a magic wand.
How do you fix healthcare?
Does your fix have anything to do with CVS, Cigna, hospital groups, drug companies, or any associated business or interest?
We’re going to guess no. But go ahead, wave that magic wand. Tell us how we fix this.
Your Rundown for Wednesday, March 14, 2018…
U.S. Tech is NOT for Sale
Broadcom’s (Nasdaq: AVGO) deal to acquire Qualcomm (Nasdaq: QCOM) has been stopped dead in its tracks.
President Trump cited “credible evidence” that AVGO could “take action that threatens to impair the national security of the United States,” as reported by CNNMoney.
The message from Washington is clear. The U.S. and its tech is not for sale.
AVGO would effectively finance the deal with over $100 billion in debt, creating a lot of pressure to squeeze extra profits out of QCOM, according to CNNMoney.
And this is far from just political posturing.
Stacy Rasgon, analyst at Bernstein, notes in a CNBC report:
“The case that has been constructed is that, given Broadcom’s business practices, the worry is that they will cut investment significantly, particularly in the 5G roadmap, weaken Qualcomm, as well as the U.S. position and allow Huawei, a Chinese company to take the lead.”
The U.S. Treasury Department also noted similar sentiment in a recent warning letter to lawyers involved, claiming the deal raised significant questions about the future of American 5G research and development.
Broadcom shares closed Monday at $262.84, rising after hours to open at $266.43 Tuesday. Only to then fall back to $261.22.
And Qualcomm’s stock, well, it took a hit too.
After news broke the deal was dead, shares fell after hours Monday from its close of $62.81 to open Tuesday’s trading at $59.77.
Now, from the shadows, a new player emerges.
INTEL! The intrigue overwhelms.
According to the Wall Street Journal: “Intel is watching the takeover battle closely and is eager for Broadcom to fail as the combined company would pose a serious competitive threat.”
Noting the Wall Street Journal report that broke the story, Barron’s claims:
“If it looks like Broadcom is likely to prevail, Intel could step in with its own offer for the chipmaking giant.”
That last sentence is not entirely clear. Which giant, Qualcomm or Broadcom?
If Intel can strike a deal here it would make Trump look like a genius. The “funny” part is Intel could pursue Broadcom or Qualcomm and do equally as well.
Long-term, our money’s on Qualcomm. Just a hunch.
Qualcomm + Intel would be a monster. And off we go into our 5G future.
Now, turning to the markets this morning…
Market Rundown for Wed., March 14
S&P 500 futures are up 7.50 at 2,776 this morning.
Oil’s up slightly at $61.08.
Gold’s at $1,325.
Bitcoin’s back in the doldrums the last few days, going for $8,751 according to CoinDesk.
Big announcement coming on Friday! No, this has nothing to do with those “boring pitches for more products” you write in and complain about.
This announcement will benefit you. It will be complimentary. And it will give you more firepower for building your wealth. Details in Friday’s issue.
We’ll talk again on Friday.
For the Rundown,