AI-powered convenience was the takeaway from this year's Google I/O conference. When we use "AI" in this context we are speaking of Google's Natural Language capabilities that leverage the company's Large Language Models (LLMs). These models (Bard for example is built upon an LLM-based platform), enable users to engage with their devices using natural language … Continue reading AI-Powered Convenience at Google I/O ’23
Adobe – Biz Slowing?Premium
Adobe's business will slow in our view as Technology companies, Media companies and companies in general reduce headcount, thereby negatively impacting ADBE's existing customer base as well as Adobe's ability to generate new subscription revenue (ARR). Our sense is that the U.S. economy softened in 2H February and month-to-date March. The key metric to watch … Continue reading Adobe – Biz Slowing?Premium
ROIC and M&A. Adobe Gets an “F”.
Quality management teams measure the effectiveness of their M&A programs on a deal-by-deal basis. My favorite measure is Return On Invested Capital or ROIC. There are various ways to calculate ROIC. More important is the discipline of working through the process. Consider Adobe's $21.8 billion acquisition of Figma ($20 billion of cash and stock plus … Continue reading ROIC and M&A. Adobe Gets an “F”.
Evaluating M&A Target Products & Services
One of the most important elements when evaluating an M&A target is the target company's Product & Services portfolio. The ultimate Product question to be answered is: "Does it make more sense to build or acquire?" It is important for the acquiring company to answer a few key questions about the target company's product portfolio. … Continue reading Evaluating M&A Target Products & Services
Analyzing an M&A Transaction
We were critical of Adobe's (ADBE) acquisition of Figma for a few reasons. These elements can be applied to the analysis of any M&A transaction. Valuation: 50x revenue is a rich valuation no matter how you slice it. I don't care how unique Figma's product offerings may be or how competitive the deal may have … Continue reading Analyzing an M&A Transaction
Adobe’s Oversized Board Nodded Its Collective Head In Approval As It Relates To The Figma Deal
As a follow-up to our two recent Adobe (tkr: ADBE) articles that were highly critical of Adobe CEO Shantanu Narayen as it relates to the Figma acquisition, we highlight for you Adobe's Board of Directors who signed off on the Figma deal and its outrageous 50x forward ARR valuation. Here is Adobe's "go along to … Continue reading Adobe’s Oversized Board Nodded Its Collective Head In Approval As It Relates To The Figma Deal
CEOs That Put Themselves First
"G" is the most important letter in "ESG" investing. "G" or "Governance" refers to the men and women who comprise corporate management teams and Boards. Management - the CEO in particular - matters a great deal as to the long-term success of any company. Too frequently CEOs and Boards put Executive Compensation ahead of corporate … Continue reading CEOs That Put Themselves First
When CEO Compensation Is The Primary M&A Driver
Too frequently companies execute M&A transactions not because a given acquisition strengthens the acquiring company's competitive position or enhances customer value, but because the acquired company could help boost CEO compensation of the acquirer by driving some combination of higher total revenue growth, higher EBITDA, higher bookings and/or a higher stock price. Today's announcement that … Continue reading When CEO Compensation Is The Primary M&A Driver
CEORater Portfolio Ahead of The Benchmark
CEORater began an experiment several years ago whereby we built a concentrated "buy and hold" equal-weight portfolio consisting of quality Enterprise Software names that would be held for a minimum of five years. The benchmark is the S&P North American Expanded Technology Software Index (SPNASEUP). CEORater is up 4.2% Year-to-Date vs. 2.0% for the benchmark … Continue reading CEORater Portfolio Ahead of The Benchmark
Update: Battle-Tested Software CEOs
We published a piece in March 2020 entitled Battle-Tested Software CEOs, that highlighted a group of CEOs that we believed would hold the line and successfully navigate the COVID waters. Here is our updated thinking regarding that list. Tickers mentioned: AAPL, ADBE, CSGP, CVLT, FISV, MSCI, PYPL, SPGI, SQ, SSNC, VRSK Andy Florance. Founder & … Continue reading Update: Battle-Tested Software CEOs
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