By Matthew Carr
Over the past couple of years, I’ve urged investors not to underestimate “the cloud.” And I’ve used my three Cs of technology investing – connectivity, content and community – to show how our world is changing… and what investors need to zero in on to be successful.
All of this leads to one of my top investment trends for 2017: the “Internet of Things” (IoT) – see here and here.
And this week, we saw these converge, delivering a big payday for investors in Mobileye (NYSE: MBLY), which was acquired by Intel (Nasdaq: INTC) for a whopping $15.3 billion.
Mobileye is synonymous with autonomous driving.
The deal gives Intel a leap forward in the self-driving space. But the price has raised some eyebrows…
In 2016, Mobileye reported revenue of $358.2 million. This was up 48.7% year over year.
For 2017, the company is expected to report revenue of $499.3 million, which is a 39% increase. And then in 2018, revenue is estimated to be $731 million, an increase of 46.5%.
At that $15.3 billion price tag, Intel is buying Mobileye for more than 20 times its 2018 revenue estimates.
By comparison, QUALCOMM (Nasdaq: QCOM) paid $47 billion to acquire NXP Semiconductors (Nasdaq: NXPI) in October. But NXP is the biggest supplier of chips to the automotive industry, and its 2016 revenue was $9.5 billion. So even though QUALCOMM’s purchase price of $47 billion seems large, it’s a mere 4.95 times NXP’s 2016 full-year revenue.
Now, Intel was already working with Mobileye. But now it gets all the partnerships that Mobileye has, as well as the corporate machine in place that drove Mobileye’s revenue to double in two years. And the synergies are what Intel keeps hammering about the Mobileye acquisition…
Because Intel wants to put its Xeon server CPU in every self-driving car. The fact is that there’s going to be 4 terabytes of data that need to be processed each day from each car. And that in turn means all those new cloud data centers offer their own opportunities.
[iu-adbox]
Only the Beginning
But the reality is that this deal is just the beginning. Just a drop in the bucket…
And a harbinger of things to come.
Let’s take a step back and start at the beginning…
In 1967, the Volkswagen 1600 was at the forefront of automotive technology. The car came with Bosch’s Jetronic, the world’s first electronic fuel injection system.
In 1969, Ford launched the first anti-skid system controlled by a computer. And in 1971, General Motors introduced the first computer-controlled transmission.
But these were “cavemen” – the Neanderthals to our modern machines.
They were big, slow and dumb compared to what those first automotive computer systems have evolved into. And beyond that, in the past 50 years, cars have gone from having one computer system to having more than 50…
Just think, each of these systems requires computer chips.
Working on cars is no longer about being a mechanic. It’s about being a computer technician.
And we’re not even talking about autonomous or self-driving cars… at least not yet.
There …read more
Source:: Investment You
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