This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 24, 2017).
Peggy Johnson and Jennifer Nason talk about past deals and the
prospect for more deals
Tech companies aren't sticking to their bread and butter when it
comes to acquisitions. In 2016, Microsoft Corp. surprised the
market with its $26 billion acquisition of LinkedIn. And this year,
Amazon.com Inc. purchased Whole Foods for more than $13
billion.
Wall Street Journal Senior Editor Yun-Hee Kim talked about
mergers and acquisitions and strategic investments with Peggy
Johnson, Microsoft's executive vice president of business
development, and Jennifer Nason, global chairman, investment
banking at J.P. Morgan Chase & Co.
Edited excerpts follow.
MS. KIM: What is the outlook for big acquisitions?
MS. NASON: I am bullish about 2018 for activity. Money is still
virtually free. The equity market has been very responsive to
M&A. Prices are still high, so we're seeing very high
valuations. That is tough. But increasingly companies are looking
at assets and saying, "This is just strategic for me. I need to
make a move."
MS. KIM: Peggy, one of your partnerships came as a surprise this
year: the partnership with Amazon on digital assistants. You have
Cortana and Alexa working together.
MS. JOHNSON: They're talking to each other.
MS. KIM: What was the logic behind that deal?
MS. JOHNSON: It started with a conversation that Jeff Bezos and
Satya Nadella had at our CEO Summit about how we're really
operating in different spaces. Jeff's all about shopping, and that
experience. We're all about productivity and that experience. I
think there was a recognition that there will be a multitude of
personal agents, and could ours talk to each other?
When it was handed off to the engineering teams, then the hard
work began. They figured out how you can have a seamless experience
between your two devices. I think you'll see more of that going
forward.
MS. KIM: Are you open to working with companies like Apple and
Google in the AI space as well?
MS. JOHNSON: We are. We try not to look at everything through a
competitive lens. Is there some shared value that together we can
build more for our joint customers? Rather than fighting over a
piece of the pie, can we grow the pie, is really our model.
When text messaging first came out, you could only text within
your network, whatever operator you had. It seems silly now, but
once those walls came down, all sorts of applications and services
were built on top of that. It ended up being good for
everybody.
MS. KIM: This partnership is an example of a potential expansion
in the AI space?
MS. JOHNSON: Yes, AI is a big area for a lot of people right
now. If we can take out some of the friction in the development
process, I think we'll start to see some of the outcomes that we've
all been talking about and envisioning.
MS. KIM: Jennifer, a lot of rivals in tech are partnering and
working on emerging technologies. Will this be a trend?
MS. NASON: It's certainly more capital efficient. Sometimes you
just can't go out and buy everything. M&A is hard,
time-consuming, and it doesn't always work. So some of these
partnerships can be a good way to have a bet in a certain area and
see how it plays out.
MS. KIM: We're seeing a lot of software companies going after
hardware, and hardware companies going after software. Jennifer,
will that trend continue in the industry?
MS. NASON: Yes, there are many examples. But the big hardware of
the future is going to be the autonomous vehicle, and the networks
that are going to those vehicles, the software, all the technology,
the content.
MS. KIM: Which companies are in best position?
MS. NASON: I would never underestimate the big OEMs [original
equipment manufacturers], so Ford and General Motors. We know
there's a lot going on there. Thousands of companies are trying to
raise private equity for elements of the autonomous vehicle.
MS. KIM: What is Microsoft doing in this space?
MS. JOHNSON: We're enabling that space. We've come out with our
connected-vehicle platform, which takes care of a lot of the
plumbing, if you will, that the car needs to go through; the
aggregation of data from all of the different sensors, off-loading
it, and analyzing it in the cloud. We've looked at a set of tools
that can enable OEMs in the space.
MS. KIM: What is Microsoft's next big growth opportunity?
MS. JOHNSON: We have a big focus in AI. Just over a year ago we
announced a reorganization. We've had AI on our campus for about 25
years, so we've put a lot energy into that, and this reorganization
will help refocus even more.
MS. KIM: You are both rare female senior leaders in your
industries. What can companies do to promote more women into senior
roles?
MS. NASON: Well, if they could just send an email out tomorrow,
and promote a bunch of people. (LAUGHTER) I hope Jamie Dimon is
listening.
I've invested more time and effort in diversity committees and
panels, and generally it's women talking to other women about how
to fix it. I think that's been a big tactical mistake on our part
to talk to each other, rather than to involve the men, and
particularly the men who are typically in power at a lot of these
organizations.
MS. JOHNSON: I'm an electrical engineer, and when I first
started out, there was nobody who looked like me out there. I
worked at Qualcomm, and I remember coming into meeting rooms, and I
could never get the floor. I could never get my opinion across. And
I thought at one point, "I'm just going to drop out."
My manager at the time said, "Don't do that. How can we fix
things?" And I said, "Well, just throw me the ball. I have
something to say, but it's hard to interject." And he started doing
that. That's when my career really took off. So I've tried to do
that over and over, you know, going forward with any team or group
of people, make sure everybody is heard. It's very important,
whether you're a quiet man, or a quiet woman.
Write to reports@wsj.com
(END) Dow Jones Newswires
October 24, 2017 02:47 ET (06:47 GMT)
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