Will Mobile Lead the Charge in M&A's Return?
It may seem like a slow period in investment banking these days, but that's not really the case according to Michael Price, senior managing director for Evercore Partners.
"CEO confidence is much higher than consumer confidence, and the people we talk to are all about 'how do I fill out my portfolio?' right now," Price said. "There's been three years that I've been watching the market in fear over what the ultimate demand cycle is going to be on cap-ex and the consumer, and now all of a sudden there's stability.
"Remember back to '02 when flat was the new up," he continued. "We may be a little bit back to that time and people are comfortable."
But when will this comfort manifest itself in the return of the deals? Price says he's already seeing the signs that it is.
"Yesterday, Nokia Siemens bought Motorola's wireless networks business, filling out their wireless business in the United States," Price said. "Today, a small telecom company called Intelus rounded out their portfolio in West Virginia. So we're seeing constantly the rounding out of portfolios."
Price says in spite of the phenomenal growth of mobile broadband over the last decade, the real growth is still ahead. In fact, he expects a 40-fold increase in mobile broadband use in the near future. But are companies getting ahead of the curve in providing services and content?
Price seemingly doesn't think so.
"Today, 50 percent of people 20 years or older don't have home phones, they've all cut the cord and gone to cell phones, they've all gone to cell phones, so the new generation is taking up these devices in a completely new manner." he said.
"This year, Apple and HP will produce the same 64 million devices—devices called computers," he said. "Apple will make $10 billion more in revenue this year than HP, so Apple is going to be a bigger PC company this year than HP, [but] nobody thinks of Apple as a PC company because you don't think of computers as iPhones."
The Future of Mobile
Over the last decade, distributors of mobile like AT&T and Verizon, have been flat compared to device makers. Will the next decade be similar? Will the real wealth creation be on the device makers?
"The WinTel monopoly was the greatest profit generator over the last 30 years," Price said. "Over the last 10 years, it's been the wireless disintermediators, which has been Apple, Googleand to a certain extent Qualcomm.
"Going forward, it could be the apps companies," he continued. "All these are small and irrelevant today."
In 2011, Apple will have more revenue from apps than from video, however Price explained. "The apps proliferation has gone wild."
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