SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Sequans Communications
SQNS 7.630-1.8%Oct 30 3:59 PM EDT
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: frmrVZguy7/2/2017 2:40:08 PM
1 Recommendation

Recommended By
JCnieuwenj

  Read Replies (2) of 2386
 
4G LTE-PRO Era mergers: Can Sequans pull off a M&A similar to Alcatel & Huaxin of PRC?
Consider Cable & Tower mergers here and abroad. Especially consider China's single State Tower company and its drive for tower efficiency and brand-blind operation for the benefit of all carriers on every single tower and Big Box.

Getting big and streamlined & avoiding inter-operation complexity is required as IoT unit count heads deeper into the billions. Where corporations once operated Device Management Suites like Blackberry's for their hundreds or thousands of iPhone and Android corporate devices and those suites struggled to evolve to manage all three OSes, the suites managing Mega-Billions of M2M devices needs uniformity, or at least less diversity.

Which leads to this M&A Commentary on consolidation occurring industry-wide:

Recall that Alcatel for decades operated a unit named Alcatel Shanghai Bell that was 49% owned by a Chinese financial entity named Huaxin (phonetically: Watson, get it?) Sales of Alcatel was failing to gain in China and worldwide was losing to Chinese brands.

The ownership of that business is now 85% Huaxin and the sub-unit named Alcatel Enterprise which operated worldwide as sales and installers of Alcatel equipment became 100% Huaxin. That meant Huaxin became responsible for ALL of Alcatel's customer facing business. ALL of it worldwide. It was a massive capitulation in order to maintain a global presence in a sector Alcatel once led before Chinese brands entered successfully. Since then, Nokia bought Alcatel and continued the above operations as-is. Ericsson has diminished enormously and risks exiting the sector entirely through closures and reorganization into emerging sectors.

Sequans today is at a similar stage of risk. They have never been closer to bankruptcy as execution in their declared business sector has entirely failed to execute. E.g., in the roll-out of LTE-only by RJIO of India, Craig Miller failed to sell Sequans solutions into the market where they are recognized leaders. Craig failed to work the customer channels with our own customers to sell CPE and mifi-type devices. That means aside from Verizon there is so little product shipping in Cat 4 and 6 and M that it raises the question whether there will EVER be sales making a profit.

Even back in 2011 when the HTC EVO with WiMax was canceled there had been profitable sales volume. Today there is only mounting debt and little equity for producing salable merchandise to earn those profits.

The risk to Sequans today is identical to the situation for Alcatel: risk of low-volume and thus unprofitable sales in the market where a Chinese business was/is taking market shares.
Of course the Chinese business faces the same legitimacy concerns and business restrictions in certain Western markets and thus....

The opportunity of a mutually beneficial JV or merger has never been more ripe.

Said simply: Sequans needs help selling product and China needs something market-acceptable to sell to the West - just like the Alcatel Shanghai Bell and Alcatel Enterprise businesses.

I see the relationship with Huawei as critical to Sequans' future but the Franco-DRC treaty on IoT 5G development dating to 2014 might need revision to permit a Huaxin-like ownership. And Intel's telecom R&D with Huawei will try to spoil any Sequans-related venture as it has previously with Intel's buyouts of Fujitsu FSWP and Picochip.

Sequans has never been in a position to see its own ending so clearly.
But is that end its death or its re-birth?

I believe Huawei recognizes the NB-IoT capability at Sequans and values it even more today as the Nuell unit receives criticism for inter-operation and maybe telemetry differences.

I believe China has fostered a win-win style of Mergers with Western companies that has been rewarding for shareholders of those Western firms.

I believe the Huaxin take-over of Alcatel Shanghai Bell and Alcatel Enterprise businesses is the template to expect and applaud when it appears in news or blogged leaks.

I continue to hold my shares LONG.
But if I hadn't been familiar with business in China and specifically with Alcatel I would have been, and I expect most of you have been, scared and selling.

GLTA
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News