Does Google's Wireless Move Pave the Way for a Sprint/T-Mobile Merger?
Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) has partnered with Sprint (NYSE: S ) and T-Mobile (NYSE: TMUS ) to launch a wireless service.
The deal, which could turn the search giant into a fifth major wireless carrier, makes it possible for the company to sell inexpensive voice, text, and data service directly to consumers. The move should help the company sell more phones using its Android operating system and it could potentially cut into the customer base served by AT&T (NYSE: T ) and Verizon (NYSE: VZ ) .
Perhaps more importantly, the deal creates new competition within the oligopolistic wireless industry and it might cause the Federal Communications Commission to drop its opposition to a Sprint and T-Mobile merger. SoftBank, which owns the majority of Sprint, stopped pursuing the idea of combining the number three and number four wireless carriers in August, which FCC Chairman Tom Wheeler expressed his approval of in a statement.
"Four national wireless providers are good for American consumers," Wheeler wrote. "Sprint now has the opportunity to focus their efforts on robust competition."
The question now is whether Wheeler and the FCC consider Google's wireless efforts, which won't involve building out an expensive network of cell towers, a fifth player in the field.
Apple earnings: $3.06 per share, vs. expected EPS of $2.60
Apple reported a blockbuster quarter on Tuesday, blowing past Wall Street's most optimistic expectations.
The company reported earnings of $3.06 per share on revenue of $74.6 billion.
Analysts had expected Apple to report earnings of about $2.60 a share on $67.69 billion in revenue, according to a consensus estimate from Thomson Reuters.
Of 43 analysts polled on EPS, the most optimistic of the bunch expected earnings of $2.97 per share. Of 40 analysts polled on revenue, the most optimistic expected sales of $74.27 billion.
Sales of iPhones hit 74.5 million units versus a 65.7 million estimate.
This is a breaking news article. Please check back for updates on this story.
Analysts' revenue expectations were higher than Apple's own guidance, which was $63.5 billion to $66.5 billion for the quarter.
"Our expectation is, that not only are they going to have a strong quarter, but we think the guidance will prove encouraging, too," R.W. Baird senior analyst Will Power said Monday on CNBC's "Squawk Box."
CNBC talked about the possibility of a SoftBank-Yahoo merger late in 2015....
Yahoo Announces Plan for Tax-Free Spin-Off of Remaining Stake in Alibaba Group
SUNNYVALE, Calif.--(BUSINESS WIRE)--
Yahoo! Inc. (YHOO) today announced management has recommended and the Board of Directors has authorized a plan for a tax-free spin-off of the company’s remaining holdings in Alibaba Group (BABA) into a newly formed independent registered investment company (“SpinCo”). The stock of the new company will be distributed pro rata to Yahoo shareholders, resulting in SpinCo becoming a separate publicly traded company.
Following the spin-off, Yahoo will continue to operate its core business and hold its 35.5% interest in Yahoo Japan. SpinCo will own all of Yahoo’s remaining 384 million shares of Alibaba, valued at $40 billion based on the closing price on January 26, 2015, as well as a legacy, ancillary Yahoo business. SpinCo will assume no debt in the transaction, and Yahoo will retain its cash.
“Today, along with our Board of Directors, I am proud and happy to announce a plan for a tax-free spin-off of our Alibaba holdings. Throughout my tenure with the company, we have worked tirelessly on a tax-efficient alternative that would maximize the value of our Alibaba investment for our shareholders. A tax-free spin off accomplishes this and delivers value directly and exclusively to our shareholders,” said Marissa Mayer, CEO of Yahoo. “Through share repurchases to date, we have returned approximately $9.7 billion of proceeds from Alibaba. Post-spin, using the closing price for Alibaba as of January 26, we will have returned nearly $50 billion dollars of value to our shareholders. This level of capital return is historic, especially for a company of our size. The plan announced today vividly demonstrates our commitment to being good stewards of capital and increasing shareholder value.”
“We have actively engaged experts in tax efficient structures over the past two years and have considered a variety of alternatives. We remain aligned with our shareholders and our plan is designed to achieve the most advantageous return of capital to Yahoo shareholders with the absolute highest probability of success,” said Ken Goldman, CFO of Yahoo. “The structure provides the investment community with clear visibility into the respective entities’ fundamentals, and also facilitates valuation transparency in SpinCo because Yahoo’s stake in Alibaba will constitute almost all of its value.”
Google Fiber Adds More Cities, But Not Phoenix
Google (NASDAQ:GOOGL) confirmed Tuesday that it will expand its gigabit Internet service to four more markets, but none of the newly chosen rank among the 25 largest U.S. cities by population.
Google said it will expand its superfast fiber-optic service to 18 cities in four metropolitan areas: Atlanta; Charlotte, N.C.; Raleigh-Durham, N.C.; and Nashville, Tenn.
That means Google will bypass the sixth-largest U.S. city, Phoenix, which is hosting the Super Bowl matching New England and Seattle.
Google also had been considering big markets such as Portland, Ore.; San Jose, Calif.; Salt Lake City and San Antonio for its gigabit broadband service. Tuesday, Google said it is still exploring all five areas and "will have updates on these potential Fiber cities later this year."
Google has built out its fiber-optic network in parts of Kansas City, Mo.; Kansas City, Kan.; Austin, Texas; and Provo, Utah.
Phoenix, San Antonio and San Jose are the sixth, seventh and 10th largest U.S. cities, respectively.
Phoenix is a very competitive market, analysts say. In October, the privately held Cox Communications — the No. 3 cable TV firm, with roughly 4.5 million video subscribers — launched a gigabit-speed service in the Arizona capital, albeit to just 5,000 homes initially.
Sprint hangs tough .....
SAN FRANCISCO (AP) -- Microsoft shares plunged more than 10 percent Tuesday after the software giant reported quarterly revenue that beat expectations but warned that a weak PC market and a strong dollar will curb growth this year. Many analysts slashed price targets on the stock and some cut their Buy ratings to Hold.
Claure and Son know that as well, now, what are they doing about growth, sub gains and/or mergers-partnerships to remain sustainable ? Mr Son didn't buy Sprint just to languish as a number 3 company ...
Now is see why TMUS short interest has doubled.......DT is hoping Mr Son will be back, someday?
DT's Hoettges: T-Mobile's current growth rate is financially unsustainable long term
January 20, 2015 | By Phil Goldstein
T-Mobile US (NYSE:TMUS) was thwarted in its efforts to merge last year with Sprint (NYSE: S), but the carrier still needs greater scale in the long term despite all of its recent growth, according to Timotheus Hoettges, CEO of T-Mobile parent Deutsche Telekom. Hoettges also said in the long term T-Mobile's blistering growth is unsustainable from a financial perspective.
"I was intrigued by the idea of having a combination with Sprint and being the 'super-maverick' in the market," Hoettges told Re/code in an interview. "I hope that the political environment will change at one point in time."
Poor Verizon.....all that debt, all those divvy's.....
By Viraj Shah in News, Tech
Published: January 27, 2015 at 5:06 am
Google Inc. (NASDAQ:GOOGL)’s plan to tap into the wireless business should come with a fair amount of benefits to consumers as well as ripple effects to other players in the wireless industry. During an interview on Fox Business, host of ‘The Clark Howard Show’, Clark Howard, said prices for plans could hit lows of $10 a month with the entry of Google in the wireless industry
Clark maintains consumers should avoid signing long-term contracts with major carriers at the moment as prices are set to go down in the coming months.
“We have had a great last year with rates going down-down but we are still in early endings of this game. It is going to be so cheap to use a cell phone and if I really reach out there I would say by the end of next year you will be able to find plans that are $10 a month. For talk text and certain amount of the web,” said Mr. Howard.
Price wars are sure to be the order of the day with the entry of Google Inc. (NASDAQ:GOOGL) as other major carriers will be forced to lower prices as one of the ways of keeping consumers happy and fending off competition. The giant search company is looking to team up with T-Mobile Us Inc. (NYSE:TMUS) and Sprint Corp (NYSE:S) to offer wireless service.
Republic Wireless currently offers the cheapest plan at $25 a month made of unlimited text call and data with the price expected to drop even further with the entry of competition of Google Inc. (NASDAQ:GOOGL)’s caliber in the space. Consumers are poised to be the biggest beneficiaries of the price wars with Howard of the opinion that Verizon Communications Inc. (NYSE:VZ) will be the biggest looser of the imminent price tussle.
“The only real loser I see in the marketplace right now from all of these is Verizon. Verizon has maintained a very high price point because of their network, but the network is becoming less important.
Greek, the key objective now for Sprint to continue it's transformative momentum centers on network performance. sprint must turn that negative perception around. words or price wars won't do that. positive customer experiences will..... Claure and Son need to make that priority one.
Masa Son commented back in 10/13, that it would take 2 years for Sprint to start to show measurable results. I'm thinking there are 3 or at the outset, 4 more earnings reports that will either prove Mr Son right or show that he's clueless on how to run a wireless enterprise and should have never spent billions of $ chasing a pipe dream....
If Google wants to fundamentally alter the wireless industry, there are other things it could do besides launch an MVNO. BTIG analyst Walter Piecyk recently noted that "buying T-Mobile and Dish (NASDAQ: DISH) would put Google on the map overnight in the wireless industry, but would likely cost in excess of $120 billion. Alternatively, Google could offer Sprint $5-$10 billion as an upfront payment for future data capacity, with the stipulation that the money would be committed to accelerate the roll out of fat channel TD-LTE networks on Sprint's ample 2.5 GHz spectrum."
Google could also zero-rate mobile access to its services, or it could expand the calling and messaging services available through Google Voice and Google Hangout. Google could even use 3.5 GHz spectrum to launch an innovative wireless offering--the company has been lobbying the FCC on doing just that. Finally, Google could work with a carrier, perhaps T-Mobile, on deploying LTE Unlicensed service, perhaps to increase competition even more in the home broadband market.
There are lots of opportunities for Google to transform telecommunications. An MVNO doesn't seem to be one of them. --Phil
Sprint targets T-Mobile customers, rouses CEO Legere
The wireless promotion bout between the third and fourth largest carriers is getting more personal.
Sprint Corp. recently launched a deal targeting customers of its nearest rival, T-Mobile US Inc., offering at least $200 for trading in their smartphone. The Overland Park-based carrier also will offer up to $350 per line that switches to cover early termination fees.
Sprint (NYSE: S) and T-Mobile (NYSE: TMUS) have been locked in a fierce promotions battle for months. T-Mobile, based in Bellevue, Wash., launched its "Uncarrier" plan months ago that's successfully lured away thousands of Sprint's subscribers and helped it add 4.9 million postpaid customers in 2014 and 8.3 million subscribers in total for the year.
Sprint has been fighting back though with promotions of its own, including a deal that will cut AT&T and Verizon Wireless subscribers' bills in half if they defect. It also recently reported its best quarter in three years.
Sprint welcomed 967,000 total customers in its third quarter, including 30,000 postpaid net additions, 410,000 prepaid and 527,000 wholesale, allowing the company to retain the title as the No. 3 wireless carrier. Sprint now has a total of 56,004,000 subscribers, compared to T-Mobile's 55,018,000 total.
Sprint's most recent promotions quickly drew the ire of T-Mobile CEO John Legere. As he frequently does, Legere took to Twitter to air his outrage.
"It makes sense, @Sprint has to target @TMobile when we're winning with 1.3M postpaid ads and they only had 30k in Q4. #sadface," Legere wrote on Twitter. "But in all honestly, this is great news for @sprint – they are closer to offering what we offer. Except on a (poopy) network. #applestoapples"
as of 9-30-14, per Nasdaq, Sprint institutional holdings below.
371 Institutional Holders
657,194,111 Total Shares Held
Sold Out Positions
did they say NEXTEL?
AT&T Inc. said Monday that it has reached a deal with NII Holdings Inc. to buy Nextel Mexico for about $1.88 billion, the telecom giant’s latest big step into the Mexican market.
The acquisition will give AT&T T, -0.93% a network that covers about 76 million people in the Mexican wireless market. The company plans to integrate Nextel Mexico with Iusacell, which AT&T agreed to buy late last year in a deal valued at $2.5 billion at the time.
The deal for Nextel Mexico also includes all of NII Holdings’ wireless properties in the country, including network assets, retail stores, three million subscribers and spectrum licenses.
AT&T said it expects the deal to close in the middle of the year. It is subject to a bankruptcy auction and approvals by U.S. Bankruptcy Court in the Southern District of New York, which is overseeing NII Holdings’ restructuring.
Even though it's not been reported, I'm sure Mr Son huddled with Nikesh Arora before and during the Google deal. Mr Son paid s fortune to get Nikesh over to SB from Google. I'll bet that decision has already paid huge dividends for the ultimate maverick.....SoftBank Sprint and Brightstar. Me thinks Google, Dish and other players in the industry have to appreciate the synergies and potential of that trifecta...
Em, before Claure went public with ANY type of reduced rate plan, I'm sure he has to get a thumbs up from his national network engineering VP confirming the network rip and replace project was completed to the point where if customers were to defect from other carriers, the customer experience would be positive. The customers (subs) will tell the story and be the best barometer on whether Sprint is turning itself around or not. Will The earnings report on 2-5-15 show measurable improvement ? Is Sprint in a better position now after the Hesse-Claure hand off then it was between the Forsee-Hesse handoff ?
Tr, who in your opinion, got the better deal with Google, Sprint or TMUS ?
Adding Google to an already competitive field that is in the middle of a major price war isn't likely to make the big carriers very happy -- that's why smaller carriers Sprint and T-Mobile are helping Google.
But T-Mobile and Sprint, in particular, are being cautious about the deal. Sprint worked a usage cap into its contract with Google that would allow the wireless company to renegotiate its deal if Google signs up a ton of customers, according to the Wall Street Journal.
That could happen. In 2018, Smithen believes Google will pay Sprint $750 million and T-Mobile $250 million for its service. That means even if Google chooses to break even, it could sell $1 billion in wireless services just three years from now.