Today: San Jose-based Polycom saw its shares rocket higher on Thursday after activist shareholder Elliott Management proposed a merger of Polycom and Canada’s Mitel Networks. Also: Facebook goes beyond likes, and Netflix hikes prices.
The lead: Polycom shares zoom higher on merger talk
San Jose-based Polycom saw its shares rocket higher on Thursday after activist shareholder Elliott Management proposed a consolidation of the telecommunications equipment industry through a merger of Polycom and Mitel Networks.
“We use a combination of Polycom and Mitel as a starting point, but we believe many other targets should eventually be consolidated,” Elliott Management wrote in a letter to Polycom’s management. “The combination would double the scale of Polycom to $2.5 billion in revenue.”
Elliott Management, led by hedge-fund manager Paul Singer, said Polycom could buy Ottawa, Canada-based Mitel, or Mitel could buy Polycom and that either would work as a springboard to a successful consolidation of the telecommunications equipment sector.
“Polycom could pay $10.00 per share for Mitel in an all-stock transaction and still yield a 70 percent return by the end of 2017 and a 95 percent return by the end of 2018,” Elliott Management wrote in the letter. “Few investment opportunities exist today with this return potential.”
Elliott urged Polycom to undertake a complete strategic review of its options.
“Polycom’s board and management regularly review and evaluate the company’s strategy as part of our commitment to enhance shareholder value,” Polycom said in response to the letter.
Elliott disclosed it has a 6.6 percent stake in Polycom, making it one of the larger shareholders in Polycom. Elliott also has taken a large “active” stake in Mitel, the hedge fund said.
“We maintain an ongoing dialogue with our shareholders, and we will be meeting with Elliott’s representatives to discuss their thoughts,” Polycom said in a statement.
Polycom soared 16.7 percent, or $1.91, and closed at $13.35. Mitel jumped 16.5 percent.
SV150 market report: Facebook lets users do more than like, Netflix raises some prices
Menlo Park-based Facebook is moving closer to expanding the “Like” button. The social network is adding several emojis besides Like: Love, Haha, Yay, Wow, Sad and Angry. Spain and Ireland are the initial test markets for the extension, which is called Reactions. Facebook shares rose slightly, 0.08 percent, or 7 cents, to $92.47.
Los Gatos-based Netflix is raising the price by $1 a month for its most popular package, which allows viewing on two screens simultaneously. The new price for the standard package is $9.99, up from $8.99. The basic package, allowing for viewing on one screen at a time, will remain at $7.99 a month and the premium package, allowing four screens at a time, will stay at $11.99. Netflix shares jumped 6.32 percent.
Mountain View-based Alphabet, the holding company that owns search giant Google, wasn’t able to buy the Alphabet.com domain prior to launching its holding company, so Alphabet has bought the abcdefghijklmnopqrstuvwxyz.com domain name. Good luck typing that in. Alphabet shares fell 0.45 percent.
San Jose-based Harmonic plunged 8.7 percent after the communication equipment provider offered lower revenue predictions for the third quarter. Revenue now should range form $81 to $84 million for the quarter, down from prior guidance of $92 to $102 million, it said.
Silicon Valley tech stocks
Up: The biggest winners by percent change were Polycom, Netflix, QuinStreet, ShorTel, VeriFone Systems
Down: The biggest losers by percent change were Harmonic, Pandora Media, eBay, GoPro, VMware.
The SV150 index of Silicon Valley’s biggest companies: Up 2.31, or 0.14 percent, to 1,626.06.
The tech-focused Nasdaq composite index: Up 19.64, or 0.14 percent, to 4,810.79.
The blue chip Dow Jones industrial average: Up 138.46, or 0.82 percent, to 17,050.75.
And the broad-based Standard & Poor’s 500 index: Up 17.60, or 0.88 percent, to 2,013.43.
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