Poor Old ARM

The motivation behind the purchase of ARM is looking more sombre today..

Purchaser Softbank was $120 billion in debt before it paid $32 billion for ARM.

Since then Softbank has got involved in a raft of odd deals.

First off, Massa Son, Softbank’s boss, told President Trump he would invest $50 billion in the USA to create 50,000 jobs.

At the same time, Softbank’s majority owned US telco Sprint was laying off employees while representations were being made to US regulators about merging Sprint with either T-Mobile or Comcast.

Softbank then put $1 billion into satellite start-up OneWeb and said it might invest a further $1.7 billion to merge OneWeb with Intelsat.

Then it bought a private equity house, Fortress Investment, for $3 billion and is talking about investing $3 billion in workspace sharing company WeWork.

Along the way, Massa launched his Vision Fund which, he said would consist of $45 billion from Saudi Arabia, $25 billion from Softbank, and a billion each from Foxconn, Apple, Qualcomm and Oracle.

It was said that the Vision Fund would have its money by the end of February.

However, so far as is publicly revealed, no significant investment has been received by the Vision Fund to date.

The 25% of ARM transferred to the Vision Fund appears to be the first tangible asset the fund has received.

As the Vision Fund is, says Massa, going to be invested in AR, VR, driverless cars and IoT, the apparent tardiness of potential investors to stump up must be an oversight.

Meanwhile the Vision Fund people say they’re talking to the Abu Dhabi public wealth fund Mubadala, which owns Globalfoundries, about a possible $15 billion investment in the Vision Fund.

Mubadala is said to fancy owning a bit of ARM, so sticking a quarter of ARM in the Vision Fund might be seen as a sprat to catch a mackerel.

All in all, the high-falutin’ talk at the time of the takeover about ARM putting Softbank at the heart of the IoT is looking a trifle askew, and the real motivation for the takeover looks more like putting ARM at the centre of a Machiavellian intrigue of smoke, mirrors and debt.


Comments

16 comments

  1. Absolutely Roy, if it looks like a shit-heap and behaves like a shit-heap and smells like a shit-heap it probably is a shit-heap.

  2. That’s another very interesting article from David Manners.

    I am not shrewd enough to interpret all these machinations: it just looks to me like yet another version of the three card trick (https://en.wikipedia.org/wiki/Three-card_Monte).

    I already had a sense of unease about this development: this new information has reinforced that feeling.

  3. Absolutely spot on SEPAM, the moment Softbank bought ARM, loads of people thought that it opened the door for RISC-V.

  4. We’ll never know, Tim, but ARM’s success was built on its business model – giving the industry an independent microprocessor architecture which everyone could use, confident that none of their competitors would be granted any advantage. Trust was of the essence. Softbank’s ownership changes the business model and puts the trust in question.

    • SecretEuroPatentAgentMan

      How does RISC-V fit into this landscape? Qualcomm is an ARM licensee but has developed its own Linux capable DSP, apparently uses several Xtensa CPUs inside their Snapdragons and now also support RISC-V. Seems they are hedging their bets. Also many other well known companies are looking into RISC-V

  5. I think the Softbanks ‘intervention’ might appear to be the undoing of ARM, but in truth it was the saving. The timing couldn’t have been better form ARM’s perspective, up and to the right growth was slowing, number of big licensees was shrinking, market expectations were sky high (this stock never fails to deliver)…they were heading for the cliff…take out exchange rate fluctuation from last years numbers…

  6. I can understand their chagrin SEPAM, they are now soi-disant bien pensants (a.k.a. liberal elitist tossers) and it must hurt a bit.

  7. Worse Jamo, the $32m fig-leaf – stinkier

  8. The $32B pawn.

  9. Spot on Keith, my thoughts exactly. It’s the liberal elite telling you what to think.

    • SecretEuroPatentAgentMan

      Indeed. And The Economist has been very, very cross with the British people after Brexit. The lecturing is getting rather shrill.

  10. Yes they keep offering me free copies and when I made the mistake of saying OK, I was phoned up by some bloke who gave me a right old ear-bashing. But I remain un-subscripted.

  11. Unfortunately SEPAM, the Economist is only letting me see a millisecond of the article – something about the UK being an entrepôt – before switching to a pitch for a subscription. I’ve never bought a sub for the Economist because it seems to me go be written by jolly clever generalists who, when they get down to particulars, are usually wrong.

    • SecretEuroPatentAgentMan

      The Economist is spamming my Linkedin feed with extracts from articles but after a few reads demand subscription. Of course there is a simple trick around this block and while I find their tactics questionable I am not sure I can encourage such tricks too much. Though it is tempting.

    • I had a subscription for my son while he was doing his A level economics (I suspect I read it more than he did…)

      I always found that if it had any opinion on a subject, which seemed rare, then it would be the orthodox view. It’s articles were never revelationary, more stodgy.

  12. SecretEuroPatentAgentMan

    Late but still of interest:
    http://www.economist.com/news/business/21717991-lack-big-multinational-companies-does-not-bode-well-post-brexit-economy-britain-has

    Perhaps the trend will be reversed, after the biggest horse jumped (or flogged off as it may be).

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