Thar She Blows! (NYSE: MBLY)
"To produce a mighty book, you must choose a mighty theme." - Herman Melville
Mobileye shares traded 28% above yesterday's close as tech leviathan, Intel, paid a large premium to make a push into the automotive sector. the company is a leader in making chips for detecting cars and pedestrians with all but a camera. The company evolved over time by creating better and better image processing algorithms for use in computer vision and artificial intelligence for cars. The deal is poised to give Intel accelerated access into the automotive market, as the company has had a slow start in growing away from its PC and server businesses. That said, these cash cows continue to fund Intel's acquisitions and other projects.
Short sellers were dumbfounded as to the valuation, losing some $344 million based on the last reported 25.8m shares sold short. Mobileye and electric car maker Tesla parted ways last summer after Tesla felt that Mobileye could not keep up with Tesla's requirements, and Mobileye felt that its reputation was at stake doing business with a company that was continuously pushing the envelope. After a fatal car crash in which a Tesla car hit a crossing trailer, Mobileye said that they would only be able to detect this kind of scenario by 2018, which clearly wasn't good enough for Tesla. Mobileye hinted that Tesla was moving so fast that it's cars may be unsafe and not properly tested before reaching the hands of customers. Another analyst, Trip Chowdhry, said that Mobileye's technology was basically obselete and that it would need to be completely replaces by a more sophisticated system, as cameras did not have a large enough view for self-driving cars. Tesla was forced to rip out any Mobileye technology from their cars and build their own proprietary Tesla Vision solution.
Intel clearly has its own plans to deliver chips to many car manufacturers by integrating Mobileye into its pristine value chain. This marks Intel's largest acquisition since harpooning Altera for $16.7 billion in 2015.