Apple to buy part of supplier Dialog in $600m deal

Customers in an Apple store at Grand Central Station in New York. (Reuters)
Updated 11 October 2018

Apple to buy part of supplier Dialog in $600m deal

  • Dialog’s shares rose by 34 percent in Frankfurt as the deal settles questions about future relations between Apple and Dialog
  • Since the first iPhones a decade ago, Apple has used Dialog power-management chips to manage their battery life

SAN FRANCISCO: Apple is to buy part of Dialog Semiconductor Plc’s business in a $600 million deal, expanding the iPhone maker’s chip operations in Europe and securing the German-listed company’s role as a supplier to the US tech group.
Dialog’s shares rose by 34 percent in Frankfurt early yesterday as the deal settles questions about future relations between Apple and Dialog, whose stock tumbled earlier this year when it said Apple planned to use chips from another supplier.
The acquisition is unusual for Apple, which rarely does such deals, and is larger than previous transactions. Apple bought Israel’s PrimeSense, creator of the facial recognition application used to unlock newer iPhones, for roughly $350 million in 2013.
Since the first iPhones a decade ago, Apple has used Dialog power-management chips to manage their battery life. Under the deal, Apple is buying patents, a team of about 300 engineers, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany.
Dialog said its 2018 revenue would not be affected and it would continue shipments of existing main power management integrated circuits (PMICs) to Apple. It expects to sell current and future generations of so-called sub-PMICs to Apple.
“We are not selling our PMIC business,” CEO Jalal Bagherli told analysts.
After the deal, Dialog expects Apple to account for 35-40 percent of its total revenues in 2022. That is down from around 75 percent in the current year. Headcount will fall to 1,800. The Anglo-German chipmaker also said it would begin a share buyback program for up to 10 percent of its stock following its next quarterly trading update.
Other chip designers in Europe have struggled to manage their relationship with Apple due to its sheer scale. Britain’s Imagination Technologies ended up being sold to a Chinese-backed fund last year after losing Apple as a client.
Shares in Austria’s AMS, which competes with Dialog in areas such as power-management chips, fell 3.8 percent.
Half of the deal’s value, or about $300 million, is cash for the Dialog engineers and offices and the other $300 million is pre-payment to Dialog for supplying chips over the next three years, the companies said. Dialog added that it would continue to deliver chips to other customers, focusing on the automotive and Internet-of-things markets, among others.
It forecast that its sub-PMIC business would achieve compound annual growth rates of 30-35 percent between 2018 and 2022. Its AMS, Connectivity and Automotive & Industrial business would grow at a 10-15 percent rate.
The deal represents an expansion of Apple’s chip design operations, which kicked into high gear in 2010 when the company released its first custom processor for the iPad and iPhone.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.