Zooms doomed deal may have exposed a weakness
Small toy figures are seen in front of Zoom logo in this illustration picture
NEW YORK: (Reuters) - Zoom Video Communications (ZM.O) is no worse off for failing to merge with call-center operator Five9 (FIVN.O) read more . At least the whole thing started and finished in just over two months, a stark contrast to doomed mergers like the dalliance between chipmakers Broadcom (AVGO.O) and Qualcomm (QCOM.O) in 2017 that dragged on for at least twice as long. But Zoom Chief Executive Eric Yuan may have opened up a vulnerability.
Zoom’s shares didn’t budge as it scrapped the deal on Friday – after all, it was no surprise read more – but they’ve moved a lot since it announced the union in July.
The video conferencing firm has lost over $25 billion in market value – around a quarter of its worth – while the MSCI All Countries Americas Software Index is flat. That puts pressure on Yuan to explain his plan for keeping growth motoring without Five9.
If he doesn’t convince, he may get an unwelcome incoming call – from an activist. Yuan holds 30% of Zoom’s vote, but a controlling shareholder didn’t stop Elliott Management from going after online storage firm Dropbox (DBX.O).
There’s no shame in trying and failing, but that doesn’t mean there are no consequences.
