It’s hard to believe that America’s massive tech industry could be considered anything but booming, but expert business analysts are now describing the industry in a surprising way. Where less than a decade ago American tech companies were on the rise, today many of them are widely considered to be “aging,” making them the perfect targets for activist investors.
Says Therese Poletti of Market Watch, “Activist investors are popping up among many established technology companies, many of which are in tumult with big, core businesses slowing or under threat from faster growing mobile devices,” pointing to newer trends in mobile technology being a factor in the decline of some major tech brands.
Serena Saitto of Bloomberg agrees, explaining that “Mature tech companies’ slowing growth, coupled with a substantial cash pile of more than $500 billion and the low debt typical of the industry, make them ripe for activist investing, which has historically targeted cyclical sectors such as retail and consumer goods.”
One example of a major tech company that benefitted greatly from the intervention of an activist investor is Yahoo. Throughout the last couple of years, activist investor Daniel Loeb has been credited with “pushing hard for Yahoo to hire Marissa Mayer from Google Inc. as its CEO,” explains Poletti. Since Mayer took over the position, Yahoo’s shares have increased by over 70%, indicating the positive impact of the strategic hiring. Loeb has owned a 6% stake in Yahoo since 2011, and will likely continue to exist as a powerful presence within the company.
Other activist investors who have taken a great interest in the tech industry include Paul Singer, Carl Icahn, and David Einhorn. Saitto credits Apple’s recent boost in stock buybacks to the guidance of successful hedge-fund manager David Einhorn, and also notes the interventions between Icahn and Dell Inc., and Singer and California-based tech company NetApp. It appears that many of these tech giants can benefit from the interventions of business-savvy activist investors, who possess the foresight to predict business trends in our ever-changing digital age.
Learn more about the roles activist investors are playing in the tech industry by reading Serena Saitto’s full coverage report for Bloomberg.