NeoPhotonics sold for $918M

 Lumentum to acquire NeoPhotonics for $16 per share in cash

Lumentum (LITE) and NeoPhotonics (NPTN) announced that they have entered into a definitive agreement under which Lumentum will acquire NeoPhotonics for $16.00 per share in cash, which represents a total equity value of approximately $918M.

NeoPhotonics Corporation develops, manufactures, and sells optoelectronic products that transmit and receive high speed digital optical signals for cloud and hyperscale data center internet content provider and telecom networks worldwide.

Lumentum Holdings Inc. manufactures and sells optical and photonic products in the Americas, the Asia-Pacific, Europe, the Middle East, and Africa. The company operates in two segments, Optical Communications (OpComms) and Commercial Lasers (Lasers). 

Laser chips made by Lumentum

The transaction has been unanimously approved by the boards of directors of both companies.

The purchase price represents a premium of approximately 39% to NeoPhotonics’ closing stock price on November 3, 2021.

Laser chips made by NeoPhotonics

Lumentum intends to finance the transaction through cash from the combined company’s balance sheet.

Related to the transaction, Lumentum will provide up to $50M in term loans to NeoPhotonics to fund anticipated growth, which may require increased working capital and manufacturing capacity.

The transaction is expected to close in the second half of calendar year 2022, subject to approval by NeoPhotonics’ stockholders, receipt of regulatory approvals, and other customary closing conditions.

“With NeoPhotonics, we’re making another important investment in better serving our customers and expanding our photonics capabilities at a time when photonics are at the forefront of favorable long-term market trends. At the center of our strategy is a relentless focus on developing a differentiated portfolio with the most innovative products and technology in our industry so that we can help our customers compete and win in their respective markets.

Adding NeoPhotonics’ differentiated products and technology and innovative R&D team is consistent with this strategy and together, we will better meet the growing need for next generation optical networking solutions. We are confident this transaction will make us an even better partner to our customers, while enabling our team to deliver significant, long-term value to our stockholders. We look forward to welcoming NeoPhotonics’ talented team of employees to Lumentum,” said Alan Lowe, Lumentum President and CEO.

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DOJ issues guideline for online content

DOJ issues recommendations for Section 230 reform

The Department of Justice has released a set of reform proposals to update the outdated immunity for online platforms under Section 230 of the Communications Decency Act of 1996.

Responding to bipartisan concerns about the scope of 230 immunity, the department identified a set of concrete reform proposals to provide stronger incentives for online platforms to address illicit material on their services while continuing to foster innovation and free speech.

The department’s review of Section 230 over the last ten months arose in the context of its broader review of market-leading online platforms and their practices, which were announced in July 2019.

The department held a large public workshop and expert roundtable in February 2020, as well as dozens of listening sessions with industry, thought leaders, and policy makers, to gain a better understanding of the uses and problems surrounding Section 230.

The first category of recommendations is aimed at incentivizing platforms to address the growing amount of illicit content online, while preserving the core of Section 230’s immunity for defamation claims.

These reforms include a carve-out for bad actors who purposefully facilitate or solicit content that violates federal criminal law or are willfully blind to criminal content on their own services.

Additionally, the department recommends a case-specific carve out where a platform has actual knowledge that content violated federal criminal law and does not act on it within a reasonable time, or where a platform was provided with a court judgment that the content is unlawful, and does not take appropriate action.

A second category of proposed reforms is intended to clarify the text and revive the original purpose of the statute in order to promote free and open discourse online and encourage greater transparency between platforms and users.

One of these recommended reforms is to provide a statutory definition of “good faith” to clarify its original purpose.

The new statutory definition would limit immunity for content moderation decisions to those done in accordance with plain and particular terms of service and consistent with public representations. These measures would encourage platforms to be more transparent and accountable to their users.

The third category of recommendations would increase the ability of the government to protect citizens from unlawful conduct, by making it clear that Section 230 does not apply to civil enforcement actions brought by the federal government.

A fourth category of reform is to make clear that federal antitrust claims are not, and were never intended to be, covered by Section 230 immunity.

Over time, the avenues for engaging in both online commerce and speech have concentrated in the hands of a few key players.

It makes little sense to enable large online platforms (particularly dominant ones) to invoke Section 230 immunity in antitrust cases, where liability is based on harm to competition, not on third-party speech.

The action follows President Trump’s executive order seeking to weaken broad immunity enjoyed by Facebook (FB), Twitter (TWTR) and Google (GOOGL).

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No more rate hikes in 2019

Majority of Fed members see rates unchanged for rest of 2019

Members see rates to remain unchanged in 2019, Stockwinners

Minutes from the last Federal Reserve meeting read, “With regard to the outlook for monetary policy beyond this meeting, a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.

Several of these participants noted that the current target range for the federal funds rate was close to their estimates of its longer-run neutral level and foresaw economic growth continuing near its longer-run trend rate over the forecast period.

Participants continued to emphasize that their decisions about the appropriate target range for the federal funds rate at coming meetings would depend on their ongoing assessments of the economic outlook, as informed by a wide range of data, as well as on how the risks to the outlook evolved.

Short term rates should decline as 30-year rates rise, Stockwinners

Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments.

Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Economic growth in 2019 likely lower than previous forecast

“Participants continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes over the next few years.

Underlying economic fundamentals continued to support sustained expansion, and most participants indicated that they did not expect the recent weakness in spending to persist beyond the first quarter.

Nevertheless, participants generally expected the growth rate of real GDP this year to step down from the pace seen over 2018 to a rate at or modestly above their estimates of longer-run growth. Participants cited various factors as likely to contribute to the step-down, including slower foreign growth and waning effects of fiscal stimulus.

A number of participants judged that economic growth in the remaining quarters of 2019 and in the subsequent couple of years would likely be a little lower, on balance, than they had previously forecast. Reasons cited for these downward revisions included disappointing news on global growth and less of a boost from fiscal policy than had previously been anticipated.”


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5G Service coming to Chicago and Minneapolis

Verizon discloses pricing for first 5G mobile service

Verizon brings 5G service to Chicago and Minneapolis, Stockwinners

Verizon (VZ) earlier said it will launch its 5G Ultra Wideband Network in Chicago and Minneapolis on April 11.

To coincide with this launch, Verizon is offering the new 5G moto mod, which is exclusive to Verizon. Beginning March 14, customers anywhere in the U.S. can pre-order the 5G moto mod.

Verizon said: “Select areas of Chicago and Minneapolis will be the first to experience Verizon’s 5G Ultra Wideband mobile service, and the company has plans to rapidly expand the coverage area.

Last month, Verizon announced that it intends to launch its 5G Ultra Wideband network in more than 30 U.S. cities in 2019.”

It added, “For a limited time, preorder the 5G moto mod for just $50 ($349.99 retail).

5G Antennas are the size of a large pizza, Stockwinners

Verizon postpaid customers with any Verizon unlimited plan, including Go Unlimited, Beyond Unlimited or Above Unlimited, get unlimited 5G data for $10 per month (with the first three months free).

To buy a 5G moto mod, customers must either have an active moto z3 on their account or purchase a moto z3 at the same time as the 5G moto mod.”

What is 5G?

Like the earlier generation 2G, 3G, and 4G mobile networks, 5G networks are digital cellular networks, in which the service area covered by providers is divided into a mosaic of small geographical areas called cells.

 Analog signals representing sounds and images are digitized in the phone, converted by an analog to digital converted transmitted as a stream of bits.

All the 5G wireless devices in a cell communicate by radio waves with a local antenna array and low power automated transceiver(transmitter and receiver) in the cell, over frequency channels assigned by the transceiver from a common pool of frequencies, which are reused in geographically separated cells.

The local antennas are connected with the telephone network and the Internet by a high bandwidth optical fiber or wireless backhaul connection. Like existing cellphones, when a user crosses from one cell to another, their mobile device is automatically “handed off” seamlessly to the antenna in the new cell.

Their major advantage is that 5G networks achieve much higher data rates than previous cellular networks, up to 10 Gbit/s; which is faster than current cable internet, and 100 times faster than the previous cellular technology, 4G LTE.

 Another advantage is lower network latency (faster response time), below 1 ms (millisecond), compared with 30 – 70 ms for 4G.[ Because of the higher data rates, 5G networks will serve not just cellphones but are also envisioned as a general home and office networking provider, competing with wired internet providers like cable. Previous cellular networks provided low data rate internet access suitable for cellphones, but a cell tower could not economically provide enough bandwidth to serve as a general internet provider for home computers.

5G networks achieve these higher data rates by using higher frequency radio waves, in or near the millimeter wave band from 30 to 300 GHz, whereas previous cellular networks used frequencies in the microwave band between 700 MHz and 3 GHz.

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Red Hat sold for $34 billion

 IBM to acquire Red Hat for $190 per share

Red Hat sold for $34 billion, Stockwinners
Red Hat sold for $34 billion, Stockwinners

IBM (IBM) and Red Hat (RHT) announced that the companies have reached a definitive agreement under which IBM will acquire all of the issued and outstanding common shares of Red Hat for $190 per share in cash, representing a total enterprise value of approximately $34B.

With this acquisition, IBM will remain committed to Red Hat’s open governance, open source contributions, participation in the open source community and development model, and fostering its widespread developer ecosystem.

In addition, IBM and Red Hat will remain committed to the continued freedom of open source, via such efforts as Patent Promise, GPL Cooperation Commitment, the Open Invention Network and the LOT Network. IBM and Red Hat also will continue to build and enhance Red Hat partnerships, including those with major cloud providers, such as Amazon Web Services (AMZN), Microsoft (MSFT) Azure, Google (GOOG; GOOGL) Cloud, Alibaba (BABA) and more, in addition to the IBM Cloud.

At the same time, Red Hat will benefit from IBM’s hybrid cloud and enterprise IT scale in helping expand their open source technology portfolio to businesses globally.

Upon closing of the acquisition, Red Hat will join IBM’s Hybrid Cloud team as a distinct unit, preserving the independence and neutrality of Red Hat’s open source development heritage and commitment, current product portfolio and go-to-market strategy, and unique development culture.

Red Hat will continue to be led by Jim Whitehurst and Red Hat’s current management team.

Jim #Whitehurst also will join IBM’s senior management team and report to Ginni #Rometty.

IBM intends to maintain Red Hat’s headquarters, facilities, brands and practices.

The acquisition will accelerate IBM’s revenue growth, gross margin and free cash flow within 12 months of closing.

It also will support a solid and growing dividend. The company will continue with a disciplined financial policy and is committed to maintaining strong investment grade credit ratings.

The company will target a leverage profile consistent with a mid to high single A credit rating. The company intends to suspend its share repurchase program in 2020 and 2021.

The company intends to close the transaction through a combination of cash and debt. The acquisition has been approved by the boards of directors of both IBM and Red Hat.

It is subject to Red Hat shareholder approval. It also is subject to regulatory approvals and other customary closing conditions. It is expected to close in the latter half of 2019.


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