The Videocon group has expressed interest in buying telecom giant Motorola’s struggling mobile handset business, which is being split into a separate company.
“We have hired one of the world’s top three investment bankers who will convey our interest to buy out the mobile handset business of the US company,” Group Chairman Venugopal Dhoot told Business Standard.
Explaining why he was bidding for Motorola’s handset business, Dhoot said his group was ready launch its pan-Indian GSM mobile operations at an investment of Rs 6,000 crore.
Also, it has a consumer durables retail chain under the brand name “Next” with over 1,000 stores across the country that stock mobile phones too.
“The Indian market for mobile phones is around 120 million units a year and we have our own retail chain stories that we can leverage. Also, we can transfer the manufacturing plant to India to leverage cheap labour in the country,” added Dhoot.
Motorola has a handset manufacturing facility in Chennai that makes both CDMA and GSM mobile phones.
Dhoot said the deal will be financed through a combination of around Rs 1,800 crore of cash reserves and long-term loans raised in the global market.
Motorola’s mobile business will be valued at between $3.5 billion and $4 billion. Last year, the company sold over 159 million mobile phones globally.
When contacted, a Motorola India spokesperson said that the company would not be able to comment on speculation.
If Dhoot is able to pull through the deal, he will become the world’s third largest mobile player with around 14.3 per cent market share - just behind Nokia and Samsung.
However, in the fourth quarter of 2007, Motorola registered a 12.3 per cent global share down sharply from 22.4 per cent in Q4 2006.
The failure to replace the popular Razr model has been the main cause of decline.
Motorola’s Indian market share is not available, even though industry experts say it is behind Nokia and Samsung.
On March 26, Motorola decided to split the troubled mobile device business into a separate company due to sustained pressure from one of its key investors Carl Icahn, who wants the business to be sold. The Mobile Devices business will focus on mobile handsets, accessories and software.
Dhoot’s record of global acquisitions has been mixed. It recently failed to acquire Daewoo Electronics, for which it bid $711 million. However, it has successfully bought Thomson SA’s television glass tube business and Electrolux’s Indian operations.
The Videocon Industries scrip rose 2.48 per cent on BSE, closing at Rs 314.55 per share against the previous close of Rs 306.95 per share.
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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