S&P 500 index futures fell slightly Sunday as investors awaited big semiconductor news, including an expected $100 billion unsolicited offer by Broadcom (AVGO) for fellow Apple (AAPL) iPhone supplier Qualcomm (QCOM), which is trying to close its own $47 billion takeover of NXP Semiconductors (NXPI). Meanwhile, Sprint (S) formed an alliance with cable operator Altice USA (ATUS) a day after ending merger talks with T-Mobile US (TMUS).
XAutoplay: On | OffFinally, a Saudi anti-corruption crackdown ensnared a billionaire prince with big stakes in companies such as Apple and Citigroup (C).
S&P 500 index futures fell 0.1% vs. fair value. So did Nasdaq 100 futures and Dow futures. The S&P 500 index, Nasdaq composite and Dow industrials all hit record highs Friday on Apple’s strong earnings and the Broadcom-Qualcomm reports.
Broadcom is close to making an offer of $100 billion or more, or about $70 a share, for Qualcomm, according to multiple reports. Qualcomm’s board reportedly is resistant to deal, with the bid expected Monday morning.
Broadcom rose 5.45% to 273.63 in Friday’s stock market trading on the Qualcomm buzz and Apple’s lift to iPhone chipmakers. That pushed its shares just past the buy zone from a 259.46 buy point. Qualcomm leapt 12.7% to 61.81 on Friday, its best levels since January.
Broadcom would gain Qualcomm’s substantial intellectual property, including key technology for 5G wireless servicess.
But a Broadcom-Qualcomm deal would carry substantial risks. Qualcomm shares have fallen sharply due to Apple withholding royalties over a licensing dispute. Qualcomm faces legal trouble and official probes around the world over its licensing deals. Meanwhile, Broadcom, a serial deal maker that is in the process of buying Brocade Communications (BRCD) for $5.9 billion, would likely face antitrust scrutiny over a Qualcomm deal. Presumably in an effort to win over U.S. regulators and President Trump, Broadcom announced Thursday that it would move its official headquarters from Singapore to the U.S.
There’s also the question of NXP Semiconductors, an automotive chip giant but also an Apple and smartphone chip supplier. Qualcomm agreed to buy NXP Semiconductors for $47 billion in 2016, but has been unable to close the deal due to regulatory concerns and investor demands. Broadcom reportedly wants NXP Semi as part of a deal.
NXP fell 2.1% to 115.02 on Friday, but is still well above Qualcomm’s $110-a-share price.
Separately, Marvell Technology (MRVL) reportedly is in talks to buy Cavium (CAVM). Marvell shares rose and Cavium’s spiked late Friday on a Wall Street Journal report that said a deal could come within weeks. Expect Marvell and Cavium to be active Monday.
Microchip Technology (MCHP) and Apple chip supplier Skyworks Solutions (SWKS) report earnings on Monday. Skyworks is in buy range while Microchip is extended. Both Skyworks and Microchip boast a Composite Rating of 98, just below the best-possible 99.
Sprint, Altice, T-Mobile
Sprint reached a deal to let cable operator Altice USA offer wireless services using Sprint’s network. Sprint will use Altice’s broadband infrastructure to bolster its network.
Sprint and T-Mobile US announced Saturday that they have ended on merger talks. The ends, for now, an on-again, off-again saga that has lasted for months, even years. Sprint parent SoftBank (SFTBY) and T-Mobile US parent Deutsche Telekom (DTEGY) could not agree on how to share control. That suggests heavy discounts and unlimited data plans among U.S. carriers will continue.
Sprint’s Altice deal notwithstanding, the telecom’s shares could retreat on the T-Mobile news. Sprint has not made a profit in years, has $38 billion in debts and will need to spend heavily to upgrade to 5G services in the coming years. Softbank reports earnings on Monday, with plans for Sprint likely to be a big topic in the subsequent conference call.
Altice shares hit a record low Friday on cord-cutting fears.
Saudi Prince Alwaleed Arrested
Prince Alwaleed bin Talal was among 11 Saudi princes and dozens of senior officials or former officials arrested Sunday under a new Saudi anti-corruption effort. The billionaire Alwaleed has big stakes in Apple, Citigroup, Twitter (TWTR), Lyft, 21st Century Fox (FOXA), JD.com (JD) and more.
Separately, Prince Mansour bin Muqrin, the son of the former crown prince, as well as seven other top Saudi officials were killed in a helicopter crash, according to news reports.
NY Fed’s William Dudley To Retire?
New York Federal Reserve President William Dudley will announce as soon as Monday that he is stepping down in mid-2018, about six months ahead of schedule. That’s according to CNBC and later the Wall Street Journal. The New York Fed is the most important of the 12 Fed districts due to its role in supervising major banks. The head of the New York Fed is a permanent voting member of the FOMC.
Dudley’s exit will provide yet another opening for President Trump to fill after he announced that current Fed Gov. Jerome “Jay” Powell was his nomination to replace Fed chief Janet Yellen. Yellen’s term expires in February.