Friday Jan.17, 2020

NBC's Peacock = The "flaky friend" of streaming

_Streaming vs. cable: "Whose side are you on?"_

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Stream

NBCUniversal unveils streaming service Peacock – it's good, but intentionally not too good

A bird of many colors... NBCUniversal (owned by Comcast) just unveiled details on the 271,366,768th player in the streaming wars, Peacock. Here's how much you'll pay/get with NBC's streaming option:

Basic version: A free, ad-supported service with lots of shows, including live sports/news (and all seasons of The Office, which leaves Netflix in 2021)
Premium version: Double the number of shows/movies as Basic (also ad-supported). But free for Comcast/Cox cable subscribers and $5/month if you're not. This one gets you the Olympics and late-night talk shows too (Basic doesn't).
Extra premium: For an extra $5/month (for both cable subscribers and cord-cutters) the ads go away.

Catch 'em all... Peacock is a play to offer great streaming, but not so great that Comcast's cable customers cut the cord. Great-ish. Peacock's entering a crowded pool:

Streaming Natives: They've been streaming since the start (Netflix, Quibi, YouTube TV).
Cable Dinos: Traditional media companies that are transitioning to the streaming world (Comcast, Disney, AT&T, CBS).
Perk Bait: These companies' core products have nothing to do with TV, but they offer streaming shows/movies as a perk to lure you into their main products/services (Amazon, Apple).

Trying to keep everyone happy... is like spending an hour at 3 different parties (on the same night). Streaming Natives like Netflix are 100% committed to streaming. Perk bait like Amazon Prime doesn't disrupt Amazon's core product. If NBC went all in on streaming, it would disrupt its main biz (Comcast's cable TV) by accelerating cord-cutting. Disney is willing to lose its cable TV biz by going all-in with Disney+ — Comcast wants it all (cable and streaming). We'll see if the strategy works.

Connect

China holds German car companies hostage in the 5G battle

To build or not to build... a Huawei-powered 5G network. That's what Germany's asking itself — China just threatened "consequences" if Germany doesn't partner with the Chinese-owned tech giant Huawei to build its 5G future. Some context:

Germany is big on cars (think Volkswagens, BMWs, Mercedes).
And the German brands sell more cars to China than anywhere else on earth.
But the US is pressuring Germany to not work with Huawei.
Now China's threatening to hit Germany's car industry if this Huawei deal gets frozen out.

Feeling the pressure... The US is leaning on Europe to avoid Huawei — it's worried the tech company is acting like a Chinese gov spy on American/Euro communications (so it's threatening fresh tariffs). But now that China's pressuring Germany's prized auto industry, German chancellor Angela Merkel faces an even tougher decision: US or China.

Between a rock and China... Despite the influence of US pressure, the global economy is also heavily dependent on China: (cough, 1.5B people and the world's 2nd largest economy, cough). China's increasingly using that size to pressure not just industries, but entire countries. Here's where else we see it:

Big Hollywood studios often won't produce movies critical of China — The last Avengers brought in $614M in China alone.
British soccer team Arsenal distanced itself from a player who was critical of China’s treatment of Muslims.
And over in hospitality, airlines and Marriott hotels have apologized (profusely) for listing Taiwan as a separate country.

Stay

Gap reverses plans to spin off Old Navy into separate company

After a walk down memory lane... '90s hoodie legend Gap decided yesterday that it won't spin off Old Navy into a separate company. Gap shares spiked 9% on news of the breakup reversal (awkward, because the stock also jumped on the breakup announcement last Feb). Looks like investors changed their minds about this relationship (and sometimes stock moves don't make sense).

The initial idea... was that Gap and Old Navy would be better able to serve their distinct customers and business needs by operating as separate companies (i.e., break up to fulfill their own unique growth paths). It changed course for two main reasons:

Cost: Breaking up is hard, and sometimes expensive – Gap said that the costs/complexity involved in the split wasn't worth it.
Revelation: While Gap was prepping for the breakup, it noticed areas for improvement and inefficiencies in Old Navy's biz that they can now work on.
FYI, reality: Gap is the slowest growing and least profitable of all its brands (Banana Republic, Athleta, Hill City...), so it can still piggyback off Old Navy — but now Gap shareholders won't earn a payout from selling off their top brand.

2020 could be the year of relationship re-evaluation... Big clothing retailers were looking to split off their best/worst brands throughout 2019 — Gap's move could change that trend.

Analysts wonder if L Brands could spin off its struggling Victoria's Secret.
J. Crew planned to spin off its better-performing Madewell brand.
And V.F. Corp already spun off Lee and Wrangler into a separate denim-obsessed publicly-traded company, Kantoor.

What else we’re Snackin’

Big T: Google's parent, Alphabet, hits a trillion-dollar valuation for the 1st time — welcome to the Big T Club with Apple, Amazon, and Microsoft
WeOut: WeWork's leasing activity has fallen 93% since its failed IPO (only 4 landlords signed with the coworker last quarter)
Eco-Soft: Microsoft is boldly saying it will go "carbon-negative" by 2030 (i.e. not only reduce its emissions, but actually help remove carbon from the atmosphere)
Pod Life: Apple sold nearly 60M Airpods in 2019 (almost 2x as 2018) – it now dominates 71% of the wireless earbud market
Wiki-Back: Turkey brings back Wikipedia after a 2-year ban (the Turkish gov didn't like Wikipedia's description of it)

Friday

Earnings from State Street

Disclosure: Authors of this Snacks own shares of Volkswagen and Amazon

ID: 1061755

Latest Stories

Pop Quiz!

Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

What’s up doc?

11h

HOP TO IT

Joshua Topolsky

We get results!

12h

This earnings season is fully operational

Balancing Act

13h

Acrobatic Accounting

So, you want to join the circus?

Megan DeMatteo

No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

15h

Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla17h

Chris Black

Black’s Gold

17h

Can you justify a $335 trashcan? Yes.

Here’s how.

22h

Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

Jamie Wilde

Read

22h

Gucci’s parent braces for sliding sales, as luxury demand unravels over high prices

Nia Warfield

Read

Matt Phillips

4/24/24

Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

Rani Molla

4/24/24

Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

4/24/24

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.