Observations on AT&T and US cellular business in general, per the CNBC stock picking exercise...
- The company has been making slow but steady growth in its revenues and profits
- The US market is nearing saturation, resulting in increased competition with Verizon Wireless and Sprint Nextel Corp. This cannot be over-emphasized, since mobile computing growth is THE place to focus energies and resourced for at least the next 5 years. Google's Android has allowed companies to tranform dead industries by making use of Google's negative margin tech and business model to jumpstart failing business models. A perfect example of this is Barnes & Noble. @paidContent: At $1.7B, Nook's worth more than Barnes & Noble itself - as per GigaOm [8]:
Microsoft and Barnes & Noble have buried the patent hatchet and teamed up to compete against Apple and Amazon in the eBooks business. The new partnership sees Microsoft investing $300 million in a new Barnes & Noble subsidiary. (My colleague Laura Owen has the complete breakdown of the deal over on PaidContent [9].)
The $300 million investment in the Nook subsidiary of Barnes & Noble gives Microsoft about 17.6 percent ownership of this business unit. That values, this business at about about $1.7 billion. Before the markets open this morning, the Nook business was valued about $900 million more than Barnes & Noble itself.
Update: Barnes & Noble stock zoomed at the opening bell – and is now trading at about $9 a share, giving Barnes and Noble a total market cap of $1.3 billion — which is still less than the Nook subsidiary itself.
- Net attributable income rose to $3.6 billion, or 60 cents per share, from $3.4 billion, or 57 cents per share in the year-ago quarter.
- Consolidated revenue rose nearly 2 percent to $31.8 billion
- The company has been witnessing growth in its ARPU and subscribers numbers, although moderate.
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- The U.S. mobile provider added 187,000 subscribers in the quarter
- Average monthly revenue per AT&T contract subscriber, or ARPU, increased 1.7 percent to $64.46
Stock performance (YTD: +3%, 6M: 12%)
US carriers need to reinvent themselves, and they need to do it yesterday. Webiste Mobithing.com share with us...
1) There are now 1.2 billion mobile Web users worldwide [10], based on the latest stats for active mobile-broadband subscriptions worldwide; Asia is top region.
This means there will soon by more business on handset communictions then there will be in the desktop business.
2) South Korea and Japan lead in mobile broadband penetration [11] with 91 and 88 percent respectively.
This means there's plenty of room for the US to grow. The only question is how?
3) Mobile devices account for 8.49 percent of global Website hits. [12]
Here's an opportunity right here, but will the staid management of cellular carriers see it to capitalize on it.
4) Many mobile Web users are mobile-only [13], i.e. they do not, or very rarely use a desktop, laptop or tablet to access the Web. Even in the US 25 percent of mobile Web users are mobile-only.
BINGO!!! Carriers should not be looking to be the traffic tolls or gatekeepers of mobile content (which is there current mindset). They should be aiming to be THE content, as well as the end to end enablers of such: apps, media, intelligence and all.
5) The drivers of mobile Web and mobile media are:
(i) Web-enabled handsets [14] - by 2011, over 85 percent of new handsets will be able to access the mobile Web. In US and W. Europe, it is already surpassed that. Lots of new handsets support 3G [15] (fast Internet).
• N.B. smartphones are only a fraction of Web-enabled phones.
(ii) High-speed mobile networks [16] - almost one in five global mobile subscribers have access to fast mobile Internet (3G or better).
(iii) Unlimited data plans [17] - Widespread availability of unlimited data plans drove mobile media in Japan, now it’s driving the US; but in W. Europe, lack of availability is holding up progress.
Re: (i) Carriers DO not think outside the box. One of the CNBC stock draft contestants recommended RIMM his top pick. While I don't agree with him, per se, the value in RIMM and Nokia is certainly there for those players who need a massive strategic boost in this mobile computing game, translated as EVERYONE besides Google and Apple. The only one who seemed to have gotten the message was Microsoft when they purchased (synthetically) Nokia, and recently part of the Nook Franchise. Deutsche Telekom should look into TMobile buying the assets out of RIMM and specializing in end to end enterprise solutions as well as consumer prodcuts right outside of the feature phone level. That's where the growth will spurt, as the rest of the world graduates from feature phones to full fledged smartphones.
Re (ii) and (iii) Instead of creating ingenious ways to force people to pay for things they already have been trained against paying for (and therefore may ever pay for), the telcos should look into adopting Google's methodology of cross subsidizing high demand services with revenue from SMBs and institutions. Basically, Google cost shifts. They take revenue from adSense and use it to fund gmail, etc.
Telcos should create real, attractive, functional and useful apps/cloud systems and bundle them tightly into their services. As the front end, they have an advantage and if they do a good job, not only will most not bother to avoicd said service, but will actually opt for said service while recommending the same to their friends. Why in world didn't AT&T or Verizon create Dropbox before there was a Dropbox? Even if they didn't have the creativity, they could have simply bought Dropbox.
Yes, the business would have driven high bandwidth usage, but isn't that would they would have wanted???? Don't they sell bandwidth? A viral campaign and cost shift strategy of offereing free storage AND a free week of cell service/data plan for every Dropbox referral customer successfully signed up would have made Sprint a number carrier and data service provider.
A web-based office front end would have rounded out the deal, ex. buying web-based company like Think-Free office, you know... Just like Google did. They same viral offers could have applied. Selling a packaged cloud-based voice mail system could have had Sprint profiting from Verizon and AT&T accounts they don't even have to pay the infrastrcuture for. A good example would have been Grand Central, which Google bought and turned into Google Voice. Spint could have done this and sold it not only to its customers but to Verizon, AT&T and T-mobile customers as well. Making money from all angles, again with that viral marketing slant.
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