The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation Chart as of Sept 30 and iPhone 14 Availability as of October 2

by | Oct 2, 2022 | TSB

There’s a lot to say about this week, and none of it is good. Apple led the declines this week thanks to a downgrade from an influential analyst, followed by a defense of the company by another influential analyst. When all was said and done, the stock lost $200 billion in market capitalization by Friday’s close.

On a positive note, the announcement of a second Amazon Day event was received relatively warmly, and Amazon was basically unchanged for the week.

The next Fab Five theme will be around their cash balances – who is rising, and who is falling as of the end of the third quarter. Note that the second tab in the spreadsheet at the bottom of this post has the latest (2Q 2022) cash and marketable securities balances. We will discuss more in the Brief in two weeks, but a lot of cash and relatively low prices makes M&A attractive. There’s just one issue – an FTC and DOJ who are opposed to market concentration.

The Telco Top Five continued to hemorrhage with an additional $24 billion in market capitalization losses this week. T-Mobile continues to have the upper hand on market capitalization versus Verizon and is one of the few non-energy stocks in the S&P 500 with equity market capitalization growth. Charter continues to decline, and their five-year return (think most of the gains since the Bright House Networks/ Time Warner Cable merger completion) is now negative. Technically, it’s been six years since the end of that merger, but the stock price is within $50/ share of that level.

Charter’s long-term debt and other long-term liabilities is just shy of $100 billion as of the second quarter. If shareholders cannot have Tom Rutledge at the top post, Chris Winfrey is the best alternative to lead the company through the storms of increased competition and economic recession. No dividend overhang (unlike Lumen, AT&T and Verizon), and current market share and cash flow – not a bad place to be.

iPhone 14 Pro and Pro Max Availability (as of Oct 2)

The best way to summarize iPhone availability this week is “week for week slip.” This applies to both iPhone 14 Pro and iPhone 14 Pro Max. Basically everything moved out a week except iPhone 14 Pro availability at T-Mobile. With the exception of silver, the iPhone 14 Pro is widely available at T-Mobile (and not at their peers – see chart for more details).

This leads to many questions:

  1. Was T-Mobile aggressive in their initial order for a specific reason (maybe a Metro promotion pulled, or is there an upcoming Holiday promotion)?
  2. Was T-Mobile not aggressive in their initial order and playing hardball on credit?
  3. What would be driving an upgrade slowdown (which is unusual given T-Mobile’s focus on 24-month contracts)?

Our guess is that T-Mobile has a lower demographic than Verizon and AT&T, even at the iPhone 14 Pro 128 GB storage option. This is a notable macro “crack” and one which should not escape scrutiny as we head into the Holiday season.

More in next week’s analysis. Files below.

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