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- 📈 Xerox’s $1.5B Power Play
📈 Xerox’s $1.5B Power Play
Apple poised to break $4T, Nordstrom to go private in $6.25B deal, Google counters breakup proposal, TPG seeks to buy Altus Power, Xerox to acquire Lexmark
Evelio Silvera
December 24, 2024
Good morning.
⚡ The Fast Five → Apple poised to break $4T, Nordstrom to go private in $6.25B deal, Google counters breakup proposal, TPG seeks to buy Altus Power, Xerox to acquire Lexmark
🔎 Market Trends → Wall Street ends higher on gains by most megacaps; US Futures Edge Lower Ahead of Christmas Eve
🎄🕎 From all of us at Bull Street, we want to wish you a Merry Christmas & Happy Hanukkah! As a subscriber you are truly a blessing to us and we enjoy bringing you the latest market and crypto insights every weekday morning. Enjoy this wonderful time of year, and we will see you again this Friday with the next edition of Bull Street
And now…
⏱️ Your 5-minute briefing for Tuesday, December 24, 2024:
MARKET BRIEF
Before the Open
As of market close 12/23/2024.
Pre-Market
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Fear & Greed
Markets in Review
Tech Shines as Markets Rise Ahead of Holiday Break
The Nasdaq climbed 1% to 19,764.9, while the S&P 500 gained 0.7% to 5,974.1. The Dow edged up 0.2% to 42,907, with communication services leading sector gains and consumer staples lagging.
The Big Picture:
Equities rallied Monday, driven by strength in tech stocks as traders evaluated mixed macroeconomic data. While new-home sales grew slower than expected in November, median prices cooled—offering a sign of relief for prospective buyers as mortgage rates show signs of stabilizing.
Consumer confidence dipped, but inflation expectations remained at their lowest level since March 2020, reinforcing the Fed’s narrative of cooling inflation. Durable goods orders softened, led by transportation, hinting at some economic moderation.
Oil rose 0.2% to $69.58/barrel, reflecting steady demand. Gold fell 0.6% to $2,628.60/oz, while silver gained 0.9%, settling at $30.23/oz, as investors balanced safe-haven appeal with macro trends.
Market Movers:
Nvidia (NVDA): Rose +3.7%, the Dow's top performer, as the chipmaker continues to benefit from strong demand in AI and data processing.
Broadcom (AVGO): Gained +5.5%, leading the S&P 500, as optimism around semiconductor growth drives investor confidence.
Hyatt (H): Fell -1.4% on news of potential talks to acquire Playa Hotels & Resorts (PLYA), which jumped +29% as the deal underscores its growth potential.
What They’re Saying:
"The tech rally reinforces the strength of semiconductors and AI as drivers of long-term growth. Investors are seeing past near-term noise to focus on structural opportunities," said an analyst at Oxford Economics.
WHAT WE’RE WATCHING
Events
There are no events scheduled for today.
Earnings Reports
Today: Sonder, Procaps Group
Tomorrow: U.S. Stock Market Holiday
MARKET BRIEF
Leading News
Xerox Makes a $1.5B Power Play for Lexmark
Why it matters:
Xerox's acquisition of Lexmark brings key U.S. assets back home while aiming to diversify revenue streams in a challenging print industry. This deal signals a bold move to pivot toward growth.
Zoom Out:
Xerox Holdings (XRX) has inked a $1.5 billion deal, including debt, to acquire Lexmark International from its Chinese owners, returning the Lexington-based printer maker to U.S. control.
The acquisition is part of CEO Steve Bandrowczak’s broader strategy to revive Xerox's flagging fortunes, which include a share price down over 50% this year. By adding Lexmark’s strong global supply chain and expanding A4 color printing offerings, Xerox bets on capturing more market share while cutting $200M in costs over two years.
Lexmark’s current owners include Ninestar Corp., PAG Asia Capital, and Shanghai Shouda Investment. This deal also addresses potential geopolitical risks associated with Lexmark's Chinese ties, particularly given recent U.S. bans on imports linked to forced labor allegations
Key Insights:
Revenue Boost: Adding Lexmark could increase Xerox's top-line revenue by ~33%, bolstering its core print and IT service offerings.
Vertical Integration: Owning Lexmark’s manufacturing capacity enhances Xerox’s ability to compete in the Asia-Pacific market and beyond.
Investor Note: The dividend cut from $1 to $0.50 per share frees up cash for growth but may test shareholder patience.
Market Pulse:
“We are putting two great American brands together,” said Bandrowczak. “This move helps us significantly.”
Bull’s Take:
Xerox’s Lexmark acquisition is a calculated pivot toward growth despite broader industry headwinds. The play for scale, cost synergies, and global expansion suggests a bullish outlook for long-term investors. Watch Xerox (XRX) for potential value-buy opportunities as it executes on cost-cutting and revenue growth initiatives. Keep an eye on the printer-as-a-service trend and related tech advancements.
Headlines
Tesla recalls nearly 700,000 EVs for tire-safety issue, but owners can sit tight (link)
Apple poised to break $4T market cap milestone as iPhone sales, AI enhancements thrill investors (link)
Nordstrom to go private in all-cash $6.25 billion deal. Is it a good move? (link)
Google Counters Breakup Proposals. How Alphabet Stock Could Benefit. (link)
TPG in talks to buy Altus Power, Reuters reports (link)
CFIUS unable to reach consensus on Nippon Steel's U.S. Steel bid, WaPo reports (link)
CRYPTO
Fear & Greed
Headlines
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On the Socials
*Hat-tip to netcapgirl