Lenovo, a Chinese company purchased the desktop and laptop business from IBM quite some time ago. The idea was to enter the worldwide market with a strong brand quickly. They did so for $1.25B. Fast forward to the present. The US government wants to purchase about 16,000 Lenovo computers. Okay, a big order, but what’s the big deal? Well, recently the U.S.-China Economic Security Review Commission has requested that Lenovo be probed into concerns about placing spy equipments into those computers. After all, the big red machine (no, not Russia anymore) is out to get the Americans.
Now, the United States appears to pride itself on competition, the free market, and capitalism. Yet when the government gets involved, it seems like all this gets thrown out the window instantly, without second thought. The Dubai ports deal was just another example of America’s recent barrier against what they apparently stand for. Read it and decide for yourself.
Speaking of politics in tech business, this one comes from the corporate politics side. ATI Technologies uses ULi chipsets for its peripherals chip (South Bridge which provides things such as SATA, USB, etc). NVidia recently purchased ULi and is announcing that they will stop production of the chipsets ATI has been using. Of course, it would be awfully weird for nVidia to continue producing chipsets for a competitor, but nonetheless, it really puts the pressure on ATI to produce a good south bridge of their own, and soon.
On that note, ATI annouced its earnings for its second quarter. They came in quite a bit above analyst estimates, but net income dropped around 40% from the same time last year. Sales of lower margin chipsets pushed down those earnings despite a rise in overall revenue to $672.4 million. Stock’s up strongly in pre-market trading.
One stock that definitely isn’t up, but is falling in pre-market is Google. With recent worries about growth rates and earnings-per-share, Google’s stock probably didn’t need the announcement that they would be issuing another 5.3 million shares of stock. This only serves to dilute the stock, infusing more equity into the market, which in turn causes everyone else’s stock to be worth slightly less, assuming earnings and such remain the same. It’ll be interesting to see if Google can still hit its earnings estimates even with this sale to the market (worth around $2.1 billion!). The stock’s down around $10 pre-market.
[tags]Lenovo, US Government, nVidia, ATI, Google, business[/tags]