"....but the simplest analogy here is that RMD is establishing an ecosystem not dissimilar to Apple/iTunes/iCould."
Would that they were establishing it themselves from fits principles.
But they are not. And that's the point.
They are BUYING someone else's innovation, and not establishing it themselves.
They are paying - using your and my capital - some other fortunate folk a premium for the value of the goodwill that has been created (and in the case of the this Brightree thing they have just acquired, without my having studies the financial statements of the company but given the nature of the business, I'll wager that the overwhelming bulk of the acquisition consideration represents goodwill.)
I invest in Resmed because of its unique and differentiated intellectual property in relation to the sleep disorder business, it's industry leading product range, its preeminent brand, and its unrelenting commitment to R&D investment in that specialist - and rapidly growing - field.
I do not invest in Resmed for an indirect path to get involved in unrelated technology platforms. I have not once thought of the CEO, CFO of the other executives of Resmed as being the people I would nominate to invest on my behalf in different business models (and no matter what you might argue, this IS a very different business they are buying).
As investors in the stock market, we should like to think that we have the ability to invest in a variety of businesses on our own accord; we don't need to mandate anyone to do so on our behalf, which is the de facto situation here.
"This is not the first technology acquisition RMD has made; they have also been collaborating with Apple and Nintendo over the last 18m."
But this is the biggest, by a country mile, so the value-at-risk is greatest.
As for collaborating with Apple etc, the should feel to collaborate away to their heart's content, and if they innovate to the point of commercialisation of some success story, then that's exactly what we, as shareholders, should want.
For management to create shareholder value organically from first principles, and not to pay value away to someone else who did.
They should rather have returned the cash to its rightful owners (you and me), and then we could have decided what alternative investment we would like to make with it.
This is an US$800m Trust-Us exercise.
And the trouble is, in my investing life I have seen far more of these exact sorts of situations come badly unstuck, and very few of them end up as prolifically wealth creating for shareholder.
(20min delay)
