The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (Aug 11)

by | Aug 12, 2023 | TSB

Investors continued to digest company-specific and macroeconomic data this week. As a result, the Fab Five declined $135 billion (2023 gains now total $2.9 trillion) and the Telco Top Five increased $16 billion (2023 gains of $3 billion). Each stock (except Google/ Alphabet) in the Fab Five lost some market capitalization (Microsoft’s loss topped $51 billion, Apple lost $71 billion), and each stock in the Telco Top Five gained (T-Mobile led the group with a $5 billion gain).

Inflation figures released this week (CPI here and PPI here) were in line with estimates, leading many Wall Street pundits to believe that rates have peaked and are headed lower. We aren’t quite so sure, as the 10-Year Treasury Note closed Friday at 4.16% (last August, that figure was 2.84% – chart here). The yield curve is still inverted, but the long end of the curve is steadily rising. Higher than normal interest rates impact refinancings, and many companies in the telecom industry are facing the grim realization that the low rates of the last decade are a thing of the past.

One figure we (and several Sunday Brief readers) are watching very closely is the price of gasoline (chart here). There is a seasonal pattern to many energy prices, but with wholesale prices approaching $3.00/ gallon and AAA reporting national retail pricing at $3.90/ gallon, many are growing concerned about lower spending in other discretionary areas just to fill the tank.

Finally, one of the companies where I served as a Board member (Sequans Communications), announced that they were being sold to Renasys Electronics Corporation for $3.03/ share (announcement here). This should allow Sequans to gain broader distribution depth while Renasys picks up high-quality engineering and development personnel. Congrats to Sequans CEO Georges Karam for two decades of leadership.

We will be doing a deep dive into two of the Telco Top Five stocks (Comcast and T-Mobile), as well as culling 10-Qs for any additional lead cable disclosures from Verizon and AT&T next Sunday. Have a terrific week! (File is below).

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