A new debate over an old filing…
Here at the footnoted Global Campus (location: the Cloud), we pride ourselves for a pretty unusual day job: There aren’t a lot of people in this world who spend most of their time reading and writing about Securities and Exchange Commission filings.
That said, plenty of people do it at least occasionally, and sometimes what they find sparks a larger debate. That seems to be happening in the corner of the tech world that watches graphics-chip companies like Nvidia (NVDA)
It started on Friday with an article in Information Week by Paul McDougal, with the headline Exclusive: Microsoft Has Acquisition Deal With Nvidia. The secondary headline pretty much explains the agreement:
“Redmond’s purchase option automatically kicks in if a third-party offers $3.4 billion or more for the tablet chipmaker’s shares.”
According to the article, if someone else acquires 30% or more of Nvidia’s shares, Microsoft gets right of first refusal. Given Nvidia’s central role in the graphics-chip market over the years, and periodic M&A speculation about the company, the article spawned a number of rewrites, links and commentaries, some of which were more breathless than the original, or emphasized the pact’s significance.
Here’s the rub: The detail came on page 49 of Nvidia’s 51-page 10-Q, filed shortly after 5 p.m. on the Friday before Memorial Day. As regular readers know, late-Friday dumps, especially those heading into a holiday weekend, tend to get our pulses quickening. In this case, though, the disclosure wasn’t exactly new: As McDougal notes in his story, the agreement dates back more than a decade (to March 2000, more specifically).
That drew something of a rebuke from Arik Hesseldahl, a seasoned tech writer who recently jumped from Bloomberg BusinessWeek (where I also worked during 2008 and 2009) to All Things D, NewsCorp.’s tech-centered website. “Everyone chill out. There’s really nothing new to see here,” Hesseldahl wrote. Not only was the Microsoft-Nvidia agreement 11 years old, he said, but it had been disclosed back to the year of its inception. Writes Hesseldahl:
“If its news to you, you probably don—t have any reason to read Nvidia’s SEC filings. Having been disclosed something like 55 times (five times a year give or take over 11 years), it’s obviously not news to anyone who routinely does read them, such as analysts, investors and pretty much anyone who pays reasonably close attention to Nvidia.”
We did a quick search of our own, and found 58 filings with more or less the same 30%-threshold phrasing, going back to at least October 2000.
Needless to say, this is the kind of thing we wrestle with all the time here at footnoted — for the blog as well as for our paying subscribers at footnotedPro: Are only truly new disclosures newsy? How overlooked does an old disclosure have to be to merit writing about it — is it still fresh if a low-circulation newsletter spotted it? What about someone’s personal blog? And how definitively can we establish that an older disclosure has in fact gone unnoticed?
These aren’t easy questions to answer. At times, we’ve decided not to write posts and footnotedPro reports about filings because they were a few days old — even a few hours old — but we’ve written others about disclosures made weeks or months before. No doubt we’ve called it wrong from time to time. And yes, occasionally, interesting disclosures can go unnoticed in plain sight for years.
In the end, both McDougal and Hesseldahl probably know more about this corner of the tech world than we ever will, so we’ll let them hash out just how significant this particular filing really is. We think they both have some good points: If indeed the takeover portion of the Microsoft-Nvidia pact has gone overlooked all this time, it’s a pretty juicy detail. It may still be newsy even if it was reported on at the time (we couldn’t readily find a prior report, but that’s often hard to pin down definitively, given the dwindling electronic record as you go back in time). After all, folks may have largely forgotten about it, or new deal rumors may make it (as Hesseldahl acknowledges) newly relevant, even if some of the Nvidia-watchers out there still remember it. For us, the bar is definitely higher when something has been disclosed repeatedly.
All of which, incidentally, is not to suggest that folks should leave the filings to those of us who read them professionally. Quite the opposite: Even before Michelle founded the site, she’s been encouraging everyone, from rank-and-file investors to other journalists, to read the fine print for themselves.
Still, as the Nvidia kerfuffle illustrates, there can be pitfalls.
See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at firstname.lastname@example.org.