The Sunday Brief

Connecting technology, telecommunications, and the internet

Value Creation – Long-term charts, Fab Five vs. Telco Top Five (July 1)

by | Jul 1, 2023 | TSB

Fourth of July holiday greetings. We ended the month and quarter yesterday – perfect timing for this interim Brief. Apple now has a $3 trillion market cap (up slightly more than $1 trillion in market value in the first six months of 2023). Also of note is that Microsoft is back to achieving new all-time highs (chart from Yahoo! here). The two companies of the Fab Five who have the highest hardware risk (and the lowest advertising risk) are hitting new highs – that flies in the face of the “software is eating the world” crowd. It might not hold but worth noting.

The Fab Five bombshell news story that broke on Friday in the Wall Street Journal indicated that Goldman Sachs was looking to exit its recently renewed partnership with Apple (article here). Specifically, the Journal notes that Goldman was looking to sell its Apple Card and General Motors credit card relationships to Amex. Apple would need to approve any transfer.

The Goldman about face is driven by a variety of factors – a softening economy, the impact of student loan repayments, risk management expertise, and regulatory pressures to name a few. Should it happen, it would represent a high-profile exit for the company.

Meanwhile, there’s a fight brewing between the Canadian government and Google/ Meta over news links. The placement of a link by Meta/ Facebook or Google, regardless of whether the reader clicks on it, generates revenue for the news organization that created the original story.

As a result, Meta has announced that their Facebook News Feed will discontinue Canadian news sources after the law goes into effect and Google announced last week that they will remove the same articles from their News tab. Based on our read of the article, this applies to articles written by Canadian news sources that are viewed in Canada. Needless to say, this is a development we will be following very closely.

The Telco Top Five had a very strong week (+$30 billion) with each stock participating. As the eye-popping allocations for broadband deployments were announced by the NTIA this week (announcement here), many analysts began to look at probable winners. Charter is set up well thanks to its aggressive bidding in the Rural Development Opportunity Fund (RDOF) auction (winner in 24 states). Verizon and T-Mobile are the worst positioned of the Telco Top Five.

That’s it for this week. File is below. Have a terrific Fourth!

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