Sign In  |  Register  |  About Mill Valley  |  Contact Us

Mill Valley, CA
September 01, 2020 1:29pm
7-Day Forecast | Traffic
  • Search Hotels in Mill Valley

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Why Walmart is buying smart-TV maker Vizio

Walmart announced Tuesday it is buying smart-TV maker Vizio in a $2.3 billion acquisition aimed at boosting the retailer's growing advertising business.

Walmart announced Tuesday it is buying smart-TV maker Vizio for $2.3 billion in a move aimed at supercharging the retail behemoth's burgeoning advertising business.

"There is a lot to be excited about with this acquisition," said Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S. "We believe VIZIO’s customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling."

"Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week," Dallaire continued. "We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment."

Walmart's proposed offer to buy Vizio for $11.50 per share in cash is another bet on the retailer's fast-growing U.S. advertising business, where ad sales rose 22% in the quarter ended Jan. 31 and is a bigger margin driver than its traditional grocery business.

WALMART TO ACQUIRE VIZIO FOR $2.3B, SALES OUTLOOK, DIVIDEND LIFT SHARES

It also gels with Walmart's efforts to change the composition of its profit streams over the next five years, planning for more of its future earnings to come from selling ads on Walmart properties than selling everyday essentials like milk and toilet paper.

The acquisition of Vizio could help the retail giant build out a vast panel of connected TV users through owning and operating Vizio smart-TVs and Vizio's SmartCast operating system, giving it more space to sell ads, Sensor Tower said.

Walmart said it sees appeal in Vizio's growing device ecosystem and its Smart TV operating system, SmartCast, which has amassed over 18 million active accounts — growing by roughly 400% since 2018.

WALMART'S 3-FOR-1 STOCK SPLIT: WHAT TO KNOW

Stephens analysts expect Vizio to generate nearly $600 million in software/advertising revenue in 2023.

"We believe global advertising and (Walmart Plus) membership alone will represent 20% of annual operating income in fiscal 2025," Walmart CFO John David Rainey said on the conference call. 

"These profit streams allow us to fund investments in our core business while also expanding our operating margins."

Walmart's offer price is a premium of 47% to Vizio's closing price of $7.82 as of Feb. 12, the day before reports about deal talks emerged. Vizio shares were up about 15.5% at $11.01 on Tuesday.

"The deal makes sense," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which holds Walmart shares.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

"I am not at all surprised to see Walmart want to be in that same competitive arena (of retail advertising) because of just the sheer amount of dollars that are available," he said.

Reuters contributed to this report.

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 MillValley.com & California Media Partners, LLC. All rights reserved.