From Investors Business Daily, Sept. 9:
Chipmaker Nvidia (NVDA), which has been trading at record highs the past month, filed a routine S-3 shelf registration statement on Tuesday with the Securities and Exchange Commission that investment bank Nomura says could be a harbinger of possible acquisitions.On Friday upon seeing the Barron's article on the filing, I read "Nvidia, King of Cash: Might They Buy IBM..." and jumped up screaming "Noooo". This drew some curious looks.
The filing gives no amount nor does it indicate that any sale is on the way, but it does open the door for Nvidia to make any number of stock or bond sales. And while the company says proceeds could be used for acquisitions, it has the standard boilerplate language that basically says the proceeds could be used for pretty much anything. Nvidia did not respond to IBD's request for comment.
Nomura analyst Romit Shah, however, points out in a research note Friday that Nvidia's balance sheet already is "one of the strongest in our coverage universe." He says the filing was ignored by investors, and possibly with good reason, but writes that "overall, it reads to us as though management is considering something more than just housekeeping."
IBD'S TAKE: Nvidia has had a strong six months, and ranks No. 9 on the IBD 50 list of top-performing stocks over the past 12 months, with an emphasis on the most recent six months. IBD's flagship screen of leading growth stocks is a key tool for investors.
Shah said it's unlikely that Nvidia would be looking to buy a pair of chip companies that have been subject to takeover rumors, Xilinx (XLNX) and Cavium (CAVM). But he also said that while acquisitions generally are not in Nvidia's DNA, it "could very well pursue a software company."
"We believe though that Nvidia would only seriously pursue businesses that are a good strategic fit; thus, improving the company's presence in nongaming markets such as data center, artificial intelligence and automotive," he wrote....MORE
Fortunately, I had stopped reading the headline too early, it actually says "Nvidia, King of Cash: Might They Buy IBM’s ‘Power’ Chip? Asks Nomura" and I was able to sit down with a contrite "never mind" and take comfort from the story:
“Cash and marketable securities in the October period, per our estimation, will be more than $5 billion or almost 15% of the market cap,” he observes.
