Opinion: M2M could re-energize these past ‘Wall Street darlings’
Hello and thanks for reading! A few points before I get
All three of these companies – Texas Instruments, Intel and
Microsoft – have tremendous businesses now. In addition to
throwing off billions of dollars annually in free cash flow, they
have tremendous “franchises” and market share in their own
I have no personal or business relationship with any of these
companies nor do I hold any of their equities, long or short.
The only source of information I have is what is available to
the public. There is a strong chance that these companies are
investing considerable efforts in the M2M space at this time…and
this would actually help to bolster my position, actually.
At one point, all three of these companies were the “darlings of
Wall Street”. They all were pioneers in their respective
fields, and used to trade at incredible multiples. Now, all
three are taking on the role of “utilities” in the world of
investing, where investors look at them in similar ways that they
do power companies.....boring, predictable and offering good
yield.....and, there is nothing wrong with that in some ways.
Investors are looking for safety, so there is a market for these
However, at some point, these three companies need to get back
into the growth phase of their businesses, and I believe that M2M
offers great potential to each of them.
The consensus among 35 analysts (listed on Yahoo Finance) shows
that they expect the top-line revenue number to actually continue
to fall in 2013, with some of them expecting it to rebound somewhat
TI has definitely been hit hard in the past two years, with
profits dropping considerably in this period.
TI would be a natural consolidator in this field, especially in
the cellular module space. They have relations with all major
manufacturers of hardware, and a substantial distribution
TI is into many areas already (low-energy Bluetooth, ZigBee and
radio) to allow it to easily snap in a possible cellular module
As well, TI’s web page lists many applications that would put
them directly into the M2M space, including Smart Grid, Mobile
Healthcare, Security, Industrial Automation and Process
Intel’s most recent quarter showed drops of 2.5% on the
top-line revenue number and 25% on profit. It has announced
substantial Capex cuts as well, which may hurt future growth.
Intel is seeing substantial declines in its PC business, due to
the proliferation of smartphones and tablets.
Intel has many technologies that could be used as building
blocks for some advanced M2M solution offerings – such as Smart
Connect, which could be leveraged to draw M2M information from the
field and VPro, for data security.
As well, it would make a lot of sense to see Intel bridge the
gap between CPUs and wide area wireless technology, so that the
ability for lower cost devices to connect to cellular networks is
built directly onto the CPU itself. Based on their announced
partnerships with Digi, they may already be moving quickly in that
Finally, Intel needs to act as a consolidator to help create
standard protocols and languages that allow seamless
integration/communication between all M2M hardware and
platforms. They have started this in key areas such as smart
homes, digital signage and smart grid.
Microsoft’s days as a high-flier may be well gone, but it
really seems to have accepted its new role as a “Utility stock”
just a bit too easily for my taste.
Microsoft has many tools in place that would allow it to become
very dominant in the M2M space (Devices running Windows in
virtually every home/office, a growing cloud-based business, a
Mobile platform to allow remote access to data and much more).
As mentioned in a previous
post, Microsoft needs to:
Find ways to better utilize X-box and Sync for usage with M2M
Tie in its mobile platforms (Surface, Windows Mobile) into M2M
platforms, preferably data that they host on a cloud-based
Use the incredible reach of their email products in the
Corporate space to find ways to easily report M2M data
Again, it is really fun to speculate, and that is all this
really is. I have no idea what is coming out from these three
companies tomorrow, let alone in the near future. If you have
other thoughts, feel free to drop me a note or comment.
As always, let Novotech know how we can help with your M2M
needs, such as antenna selection. You can visit our web page
@ www.novotech.com. As
well, feel free to reach out to me directly
....larry(@)novotech.com. You can also
follow us on Twitter (@NovotechM2M) and you can follow me
personally as well (@LBNovotechM2M).