- AT&T’s second-quarter earnings mishmash (to the downside)
- HBO Max and lackluster lockdown subscribers
- New CEO washes hands of DirecTV
- Satellite internet: A rising technology star
- Alan Knuckman says follow the Fed’s money
- Don’t get used to “good” economic numbers
- Ray Dalio on the flimsy U.S. dollar
- A reader says euro-stimulus is a “fiasco”… Another reader sheds light on the Empire State… And more!
AT&T issued its second-quarter earnings report last week, and it was a mishmash of bad… and worse.
And even though the telecom mainstay scrapped forward guidance for the rest of 2020 in April — a practice many companies have taken up in this Murphy’s Law year — AT&T still fell short of analysts’ expectations.
Some highlights… er, lowlights of the Q2 report?:
- Net income cratered nearly 40%
- AT&T lost 151,000 wireless phone customers (to say nothing of the 338,000 customers who’ve stopped paying for service but can’t be dropped per government pandemic protections)
- WarnerMedia — a subsidiary of AT&T — saw revenue drop about 23%
Zooming out further…
Craig Moffett of firm MoffettNathanson says: "Subscriber losses in [AT&T’s] Entertainment group continue to accelerate, and recent price increases to compensate appear destined to only make matters worse."
Specifically, Investor’s Business Daily reports: “After its HBO Max streaming service launched in May, AT&T reported 36.3 million U.S. subscribers to HBO Max and HBO, up from 34.6 million at the end of December.”
That’s an acquisition of just under 2 million subscribers when most Americans were on lockdown… and presumably bingeing television like it was a full-time job. Mr. Moffett called the HBO Max launch *throat clear* “an inauspicious start.”
But for the real elephant in the room…
“In a world where all traditional pay TV providers are losing subscribers, DirecTV still stands out,” says trade publication Fierce Video.
Stands out: not in a good way. “AT&T lost nearly 1 million TV customers in Q2 2020, continuing a rapid exodus of users from DirecTV,” Ars Technica reports.
In fact, AT&T sure sounds disenchanted with the satellite TV provider that AT&T purchased for $49 billion in 2015. That’s if new CEO John Stankey’s comments hold any water.
(Although it’s important to note while Stankey became AT&T’s top gun on July 1, he’s actually been a company man for 35 years.)
Chief exec Stankey seemed determined to distance himself from DirectTV when he said the following on a conference call last week…
“You can go back and look at comments I made very early on… we didn’t necessarily [purchase DirecTV] because we love satellite as a technology to deliver premium entertainment-based video content.
“We [liked] the customer base and it was an opportunity to move that customer base into the right technology platforms moving forward and that’s clearly where we’re investing,” Stankey said.
Translation: We couldn’t buy a cable company in our efforts to compete in the Comcast-NBC sandbox, so we settled for the next-best thing.
Will AT&T dispense with DirecTV altogether? Seems a distinct possibility. (Although it’s doubtful the company will be able to offload DirecTV for what they paid for it.)
All to say: Satellite TV on its way out… Satellite internet on its way in? Indeed, small-dish satellite TV had a good 25-year run, but its days seem numbered…
And there’s quite literally no time like the present for the latest technology revolution — lightning-fast internet, transmitted anywhere on Earth via a halo of low-Earth-orbiting satellites.
With U.S. workplaces transitioning to pandemic work-from-home orders — perhaps permanently — and with most schools, colleges and universities closed for the foreseeable future, high-speed internet is a must-have. (Not to mention for families making a beeline out of COVID-19 epicenters to the stix.)
While U.S. cities and suburbs have multiple reliable broadband options, that’s not the case for 42 million Americans who live in rural areas of the country, according to LA-based research firm BroadbandNow.
A fact that’s prompted FCC Commissioner Jessica Rosenworcel to say: “No matter who you are or where you live in this country, you need access to advanced communications to have a fair shot at 21st-century technology.”
And the pandemic has only accelerated what our technology expert Ray Blanco’s been telling us for about three years now…
“A new space race is heating up to bridge the digital divide and bring everyone in America, and the world, cheap, fast broadband,” Ray says. “Times like these don’t come around very often.”
Particularly for investors: “The potential… is like no other emerging industry I’ve ever seen,” Ray says. Akin to buying Apple circa 1980… or Amazon when it was just a discounted bookseller.
And Ray’s preparing for an announcement TOMORROW, July 28, that might send the industry soaring… Learn all about this urgent market prediction right here.
A sign of the times: GOOG is up 1.6% at last check after telling its workforce to stay home through next summer, per WSJ. (Internet’s imperative? Just sayin’.)
For more market context, we turn to CBOE trading veteran Alan Knuckman. “As I’ve said… since the market started to jump off its March lows, you have to follow the money. The Fed is going to do anything and everything to keep this market afloat.”
In light of which, Alan predicts: “All-time highs are in sight for the S&P 500 as the broad market barometer consolidates,” he says. “The S&P break above 3,200 is holding strong. That’s a huge win for the bulls.”
As for the tech-heavy Nasdaq, Alan says: “It’s true — the Nasdaq has encountered some selling. Nothing sustained for more than a day or so, but it’s happening. It makes sense for traders to take some of the money off the table here on these highflying tech trades and look for other sectors to step up.
“That being said, I’d like to see the Nasdaq maintain its momentum,” says Alan. “It remains a powerful force that continues to lead the market off its pandemic lows.”
Checking the market’s temperature today, the Nasdaq’s up over 100 points to 10,466 as all the Big Tech names trade higher. And the S&P 500 is hanging tough at 3,230 while the Big Board’s gained 90 points to 26,560.
As for commodities, crude’s marginally in the red at $41.19 for a barrel of WTI. Of course, gold is the story — up $35.70 to a record-breaking $1,933.20 per ounce.
For the economic number of the day, the Commerce Department reports orders for durable goods — anything designed to last three years or longer — increased 7.3% in June. While orders for “core capital goods,” a category excluding aviation and defense, fell 2.3% on a year-over-year basis in June.
Economist Oren Klachkin warns we might not see many more of these “good” numbers:
"The sugar rush from reopenings has now faded and a resurgence of domestic coronavirus cases, alongside very weak demand, supply chain disruptions, historically low oil prices and high levels of uncertainty, will weigh heavily on business investment.”
Good to know…
“There’s a trade war, there’s a technology war, there’s a geopolitical war and there could be a capital war — that’s the reality,” says famed hedge fund manager Ray Dalio.
While the stock market’s shrugging off niggling “geopolitical tensions” today, Dalio’s calling out the soundness of the U.S. dollar — down to its lowest level in almost two years.
According to MarketWatch: “The ICE U.S. dollar index, which measures the currency against a basket of six rivals, reached a 22-month low on Friday and fell lower again on Monday.” (This after the index hit a three-year high on March 22.)
And when it comes to the U.S. dollar, Dalio doesn’t believe the real enemy is half a world away; instead, he says the U.S. is its “own worst enemy.”
“You can’t continue to run deficits, sell debt or print money rather than be productive and sustain that over a period of time,” Dalio says.
“If we don’t work together to do… sound things, to be productive, to earn more than we spend, to build the stability of our currency and build a good balance sheet, we are going to decline,” he concludes.
Think it’s a coincidence that gold prices have blown past record highs today? The precious- metal safe haven continues to attract buyers — including Ray Freakin’ Dalio himself who was fully on board with gold more than a year ago.
From one currency to another, a reader reacts to Friday’s 5: “The €750 billion rescue package is not through by a long shot — it is just another fiasco.
“Because the European Parliament has to pass it and there is a lot of pressure coming from all sides… Italians want more, Hungary and Poland will veto anything that detracts from their sovereignty; this is not over.
“How do I know? I live right smack in the middle of Europe in Bavaria where SARS-CoV2, as it is called here in Germany, is picking up moderate steam with new infections and a second wave possibly due in the late summer/early fall.
“All the money printing by Lagarde at the ECB is not going to help. Time will tell, but ask me in three to four months if I was correct.
“I go along with Doug Casey’s take that the euro is in its death throes, after which the EU will slowly fall apart. And the Germans will not agree to pick up the tab for others’ spending sprees.”
“It’s been a long time,” says a faithful 5 reader. “I’ve been lurking since this pandemic started, but what’s happening here in New York state is so vile I can’t keep quiet.
“It’s hard to get your head around the evil things Comrade Cuomo has been doing: the nursing home scandal, field hospital boondoggles, prisoner releases, etc. I want to find humor somewhere in all of this — after all, he’s even policing our beers and wings in restaurants — but it’s no joke.
“Since our wannabe emperor issued his infamous executive order four months ago, N.Y.’s COVID-related death count is at least 6K just in nursing homes. The total statewide number is much greater and isn’t just the highest of any state; it’s higher than other countries. Cuomo is directly responsible for this, yet he keeps dodging and deflecting blame.
“I don’t see any way it could be due to incompetence. It reeks of malevolence.
“By the way, that report Cuomo issued a couple weeks ago (where he investigated himself and found no wrongdoing) was a piece of work. And his impish expression when he showed off that Styrofoam mountain of death was maddening. But at least his hubris is bringing some heat now.
“I’d like to give a big shout-out to Congressman Steve Scalise for investigating Cuomo as well as to Sen. Rand Paul for calling for his impeachment. Apparently some members of the N.Y. State Assembly are even disturbed by all this stuff (I’m not holding out much hope there, but it’s saying something when the swamp things in Albany notice a stench).
“Also, hats off to the law firm in NYC that filed a class action suit against Cuomo and de Blasio. Go get ‘em!
“So yeah, here’s to the end of ‘Cuomo Chips.’ His deadly reign of tyranny can’t come crashing down soon enough.
“I know everyone is affected by what’s happening, everywhere. Apologies for ranting about my home state. To fellow citizens: Stand strong together!”
The 5: It’s good to hear from our reader in Buffalo… who gives new meaning to Empire State.
The 5 Min. Forecast
P.S. You won’t hear this incredible prediction revealed anywhere else…
While the media focus on Big Tech stocks, they’re missing a much bigger story that’s rapidly unfolding… An underlying story that has the potential to change your bank account for good.
And investors who act now could have a real shot at life–changing profits from this coming $260 billion revolution.
Find out what’s expected to take place TOMORROW, July 28… when Ray Blanco predicts a shocking announcement might be the beginning of the next tech revolution (based on a new Apple patent).