Making Financial Headlines · Page 4
Bank of America Sees Marvell's Big Purchase and Reaches for the Calculator
· New York time
Bank of America says Marvell Technology shares are likely to pull back considerably after its multibillion-dollar acquisition of Lumentum Holdings. The bank's assessment puts the market response to a large technology deal in focus, rather than treating the announcement itself as proof of success. Marvell makes chips used in data centers and networking, while Lumentum makes optical components. Bringing businesses in related parts of the technology supply chain together gives investors a transaction to assess alongside the demand for data infrastructure. The price and the expected value of the combination are central to that assessment. Bank of America's view is a warning about the shares, not a certainty that they will fall by a particular amount. Other investors may weigh the deal differently, and the outcome will depend on how the businesses and the market develop. Still, the timing supplies a familiar corporate comedy. The buyer presents a large acquisition as an opportunity; the bank immediately asks what happened to the receipt. Executives can make a combination sound elegant with a few slides, but shareholders ultimately have to consider the cost as well as the ambition. In the technology business, even an acquisition connected to the flow of data cannot make the purchase price disappear. The checkout counter remains stubbornly analog.
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