When the Market Fails

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Here’s the latest in capitalism:

Qualcomm Inc. rejected Broadcom Ltd.’s unsolicited $105 billion offer, setting up a potentially hostile showdown between two giants of the chip industry over what would be the biggest technology takeover ever….In a statement Monday, Qualcomm’s board said the offer, which Broadcom submitted last week, dramatically undervalues the company and comes with significant regulatory uncertainty.

For the past year, until Broadcom made its offer, Qualcomm’s market cap has been around $80-85 billion. Anybody could come in off the street and buy Qualcomm stock that valued the company at that price. But if someone offers to buy all the Qualcomm stock at that price, suddenly capitalism has gone bonkers and the price signal of the market is off base by 30 or 40 percent.

Company boards routinely reject offers like this, and to the extent that it’s just a negotiating tactic I suppose no harm is done. But all too often it’s sincere. Management doesn’t like the idea of losing their prestigious jobs and the board goes along, so they propagate the fiction that their company is really worth a lot more than the market says it is. If it were put to a vote of stockholders, I wonder how many would agree? If it were me, I’d pocket the immediate gain and then invest it somewhere else. Why wait?

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

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