Nasdaq Buying Marketwired Bad for Warren Buffett

Steve Kanaval |

I talked to some industry insiders who think this crushes revenue for Businesswire which is owned by Berkshire Hathaway (BRK-A) who's shares have been keeping pace with a down market in 2016, but it doesn't really move the needle for Warren Buffett like American Express or other large businesses run by the Berkshire Team. But the landscape is changing.

The thing to watch is how this consolidation exposes the margins for the business line . Know that we stand on the doorstep of a new frontier where public companies can put out information (public filings) via Social Media. Every public company would rather put out information on Twitter (TWTR) or FaceBook (FB) than to file the way they do now, it is archaic and expensive.

This is a classic disrupt where a 90% lower price topples the current oligopoly they use today. It's coming sooner than you think. Without the strong political lobby this would be gone already.

I think all these businesses go to zero. But that's just me...being me. I think everything goes to zero like Digital Equipment (DEC) and Enron (ENE). It is the curse of being a former trader who writes.

Warren call me...

This comes on the back of an announcement today that Nasdaq said it has entered into a definitive agreement to acquire Marketwired who serve over 8,500 clients, including Forbes 2000 companies, private corporations and public relations agencies. The acquisition is expected the deal will be funded through a mix of debt and cash on hand and is expected to close in the first quarter of 2016.

Nasdaq said the following: "This is a major opportunity for our Corporate Solutions business to enhance its end-to-end portfolio of services for communication professionals -- including news distribution, media research, social media and analytics," said Stacie Swanstrom, Senior Vice President and Head of Corporate Solutions, Nasdaq. "We will also make use of existing resources -- including an expanded presence in North America, particularly Canada -- to provide an even stronger service and account management experience for our clients."

Nasdaq COO said: "This transaction is a testament to our commitment to growing this business and delivering the most innovative communications tools and intelligence to our Corporate Solutions clients across the investor relations and public relations solutions suite," said Adena Friedman, President and Chief Operating Officer, Nasdaq. "As our clients' needs continue to expand, we will be well-positioned to offer new tools, content, and services to meet their evolving IR and PR challenges and opportunities."

The acquisition is expected to be accretive to Nasdaq's non-GAAP earnings within twelve months of closing and should have no material impact on Nasdaq's financial leverage or capital return strategy.

Market wired CEO said: "There is a natural fit between the two organizations in terms of our long-term strategy and shared values based around innovation and customer centricity," said Adnan Ahmed, President and CEO, Marketwired. "We are excited about the benefits this combination will provide to Marketwired clients through a broader global distribution network, a comprehensive end-to-end workflow solution, and improved customer service."

Warren email me..stevek@equities.com


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

GSV Capital Corp

GSV Capital Corp is an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company.

Private Markets

D-Wave

D-Wave Systems is the first quantum computing company. Its mission is to integrate new discoveries in physics, engineering, manufacturing, and computer science into breakthrough approaches to computation to help solve…

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…