Referring to Peter Clarke's article on NXP's IPO on the 23rd of July - In my opinion, I don't think the NXP IPO is a good buy at the $18 to $21 offer price - it is simply too expensive. NXP is just simply trying to restructure its capital - i.e getting rid of loans by converting debt to shareholders equity.

But here is really what they are offering investors: NXP currently has about 243 million shares and they plan to sell 14% of this stake (34 million shares) for between $18 to $21. Now, the value of their equity is currently about $820 million (Q1 2010). This means the book value or worth of each NXP share at the moment is $3.37. Now, why would I even pay $18 for the same share?! NXP should be offerring a greater share of the company for this price, or they should drop the IPO price further, to attract investors.

Furthermore, NXP has a debt of about $4 billion which is due in about 4 years. The interest expense of about $300 million annually has made it very difficult for NXP to record profits in the past 2 years or so. So NXP must come up with $4 billion very soon or rollover the loan and continue paying interests of about $300 million every year. This is where the over-priced IPO comes in - NXP wants investors to come up with $700 million which they can use to pay off part of this debt. I certainly don't want to be doing that!

In addition, even if NXP could restructure their capital entirely with shareholders' equity, (i.e. raise about $4 billion from an IPO to cancel off the debts and thus save $300 million every year) they still would not be able to record a profit. This because of the huge sums they expend on operations. Cost of operations for Q1 2010 was $428 million - this also happened to be the figure for Gross Profit - so, no money was made in that period, not to mention the obligation to pay interest on outstanding loans. In fact, huge losses were made in other financial periods.

Overall although NXP has impressive Gross Margins (about 20%), the cost of operations severely weighs down the company's earnings. Thus, it is probably a poorly run company with an inefficient organizational structure and poor business strategies, but they certainly have good products to be recording the kind of sales shown in their books. However, I definitely do not want to be the investor to pay huge sums for their shares and hope the company performance improves.

Just to give another example, supposing they were miraculoulsy able to record $100 million in earnings, this would put them on a Price-to-Earnings (P/E) ratio of 44 at the proposed IPO price of $18. A P/E ratio of 44 means I expect to get returns of 2.2% every year on my investment! I guess it is probably better to put my money in a savings account and be 100% sure my initial capital will not depreciate. Anyway, if I were trading on the NASDAQ, I would short NXP immediately it was listed.

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A new era of digital signage has begun. There are so many new companies about. One I heard about that is local to me is http://www.digitalsignage.net/ which got me wondering how many digital signage companies exsist and how good is digital signage?

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Every night, you can't wait to go to sleep because you know you will be dreaming about the IEEE. You even have framed pictures of the IEEE's Board of Directors. You can't keep it a secret any longer. Now, here is your chance to tell the whole world, why you love the IEEE.

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The unveiling of the $35 India tablet is perhaps another Bottom of Pyramid Strategy that is driven by the needs in the emerging economy, with the government initiatives to drive education technology and bring broadband connectivity to India's 25,000 colleges and 504 universities and make study materials available online.

This latest addition of the low cost innovations is such of the likes such as the Nano Compact car and the $2000 open heart surgery.

One of the benefits that this low cost tablet can leverage is the open source software ( google docs etc ) through the wi-fi and internet to create and share the contents, something which the existing tablet fall short of, in the common platform for content creation and sharing ( software ).

Besides the low cost innovations through the $35 tablet, which aim to bring accessibility of the education content, it brings another dimension of thought. Would the digital content of the study materials ( books, publications, journals, case studies etc ) be make available at low cost ( or no cost ), extending the likes of the opencourseware such MIT in the course materials to e-publications, e-journals, e-books ? Emerging economies would welcome this.


http://www.pcworld.com/businesscenter/article/201821/what_could_you_do_with_a_35_tablet.html?tk=hp_pop
http://sg.news.yahoo.com/ap/20100723/twl-as-india-supercheap-computer-3rd-ld-d8d2a8b.html

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With the launch of the ipad on 23rd July in singapore, it is interesting to see how the supply chain closest to the customer ( the main retailers ) shapes the demand by segmenting the releasing of the ipads in different block of time. This control of the numbers is in addition to the allocation demand from Apple to the main distributors in the region itself.

Along with this, there is predictive increase in the mobile dataplan increase, subscription contents of the web, besides the sales of the appls. The ipad has drives its complementory ( contents subscriptions, dataplan, appls )and its supply chain industry, in the specific components used.



http://www.businesstimes.com.sg/sub/latest/story/0,4574,396478,00.html?

http://www.businesstimes.com.sg/sub/bizit/story/0,4574,395507,00.html?

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