Change Agent Orange? Tech to Talk to Trump
High-ranking executives from Amazon, Apple, Cisco, Facebook and Oracle are planning to meet President-elect Donald Trump at Trump Tower in Manhattan this Wednesday, as IT and communications executives start to look at how they can benefit from the proposed policies of the new administration.
Bloomberg reports that Alphabet Inc. 's (aka Google) Larry Page and Eric Schmidt will be attending that meeting, as well as Cisco Systems Inc. (Nasdaq: CSCO) CEO Chuck Robbins. Recode says that Apple Inc. (Nasdaq: AAPL)'s CEO Tim Cook and Facebook COO Sheryl Sandberg will also be in attendance, while SpaceX and Telsa boss Elon Musk may -- or may not -- be there.
On the agenda for the tech summit are topics like immigration, policies on China, repatriating cash held offshore to the US, and corporate tax codes. Some of the largest overseas cash holders in the tech industry happen to include Apple, Microsoft, Alphabet, Cisco and Oracle. Ironically, these are mostly the same companies that threw money at the Hillary Clinton campaign and even Bernie Saunders in the Democratic primary contest, while ignoring Trump.
According to an Oxfam report from April 2016, Apple holds more money overseas -- about $181 billion -- than any other US company. In total, the top 50 US companies hold $1.4 trillion overseas.
A turning tide Nonetheless, companies in the tech and communications sector are already looking at the positive aspects of a Trump presidency. The incoming administration has, for example, promised to cut the corporate tax rate from 35% to 15%. Many observers also expect to see less regulation, which, especially when combined with the return of offshore money to US corporate coffers, should mean more mergers and acquisitions on the horizon.
"It's hard to imagine that there's not going to be more openness to consolidation," T-Mobile US Inc. CFO Braxton Carter said last week. (See T-Mobile CFO on Trump: Expect More Consolidation & More Competition for more.)
"It will allow us to have better cash flows, better earnings, have the opportunity to invest in our networks, in our people, and those two things make it great for business owners," said AT&T Inc. (NYSE: T) CFO John Stephens at a Barclays conference last week.
Merger mania? But it's not as if there hasn't already been a boatload of mergers and acquisitions this year. (See Microsoft Closes LinkedIn Acquisition. What's Next?, Consolidated Snaps Up Fairpoint for $1.5B, For Marvell, TCB Might = M&A and CenturyLink Splashes $34B on Level 3 Buy for just a recent sampling from our database.) So what more could a Trump presidency bring?
Well, T-Mobile is widely expected to be back on the M&A menu. AT&T tried for a $39 billion merger with the "uncarrier" in 2011, which was blocked by the US Department of Justice. Sprint and T-Mobile dropped talks over a $32 billion merger in August 2014.(See Rumors of a Sprint/T-Mobile Merger Again.)
In fact, SoftBank Corp. , which owns Sprint, is already cozying up to Trump. SoftBank CEO Masayoshi Son met with Trump last week in New York. Soon after that, the Japanese businessman said he would invest $50 billion in the US in a bid to create 50,000 new jobs, although he did not go into much detail on how that would be achieved.
Nonetheless, it seems likely that a Sprint/T-Mobile mega-merger could be one of the first huge comms deals up before the next administration.
T-Mobile's CFO Carter, meanwhile, is expecting to see more entrants into the mobile market in the coming years. In years to come, he stated last week, "we'll sit back and just chuckle at the idea that there would only be four major players [in wireless, in the US]."
A sting in the M&A tail? Despite broad expectations that a Trump administration will be more friendly to consolidation in the tech industry, it may not always be the case. In October, Trump spoke out against the proposed AT&T and Time Warner merger. "AT&T is buying Time Warner and thus CNN, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he's quoted as saying of the potential deal.
So the motto may be: Merging mobile networks is good. Media networks? Not so much.
- T-Mobile CFO on Trump: Expect More Consolidation & More Competition
- Trump Win Will Reshape FCC
- Trump's Impact on Telecom Still Uncertain
- Trump's Telecom Policy? Who Knows?
- Clinton Tech Plan Draws Sharp Contrast to Trump's Thinking
— Dan Jones, Mobile Editor, Light Reading