Apple & Qualcomm agree to disagree
Hey Snackers,
Yes, it's International Haiku Day:
So many earnings,
Nasdaq reached eight-thousand points,
Round numbers are nice.
Qualcomm wins estimated $3B/year from Apple
The treaty of Vers-iPhone... Apple announced a legal truce Tuesday with Qualcomm. The patent lawsuit courtroom drama is over. Then it shockingly defined the relationship, announcing they're biz partners. Again. Qualcomm shares hulked out, surging 23% on news they'll supply iPhones once again.
Designed in California. Made in China. Litigated everywhere... The relationship between Apple and Qualcomm is swinging back to love after previous love/hate chapters:
- 2007 - 2016: Qualcomm provided Apple bits of hardware that helped iPhones destroy BlackBerry, Motorola, Nokia, and a million other now-obsolete gadgets.
- 2016 - 2019: Apple ditched Qualcomm for Intel. Qualcomm went on a suing rampage, claiming Apple whispered its secrets into Intel's ear and profited off its patented tech.
- Yesterday: Apple settled — It's paying Qualcomm an undisclosed amount for past misdeeds. And it's switching back to Q for iPhone modems. Lawyers aren't thrilled.
- The next six years (with option to extend for two more): Based on our rough calculations, that'll add $3B-$5B annually in sales for Qualcomm (that's a big, big deal).
Qualcomm's leverage = 5G... The San Diego-based chip-maker is one of just a few making chips needed for the new 5G network. Intel is reportedly behind (you can't round up from 4.5G), and China's Huawei was labeled a national security threat. Apple needs Qualcomm.
PS: Right after the deal, Intel announced it's done with 5G. That's one way to rebound from getting broken up with by Apple.
Walmart's first subscription box: it's for kids
Fancy new onesie... Got it from Walmart, which just partnered with KidBox to launch its 1st subscription box for clothes. But it's for kids and "borrows" heavily from Stitch Fix's core business model: Fill out online personality/style quiz, then Walmart's human/algorithm stylists choose/send you clothing.
- The price: 4-5 items per box, $48 per box (Walmart says that's 1/2 the retail price of the bundle).
- The "Kid Quiz": Awkwardly select if your toddler is "City Cool," "Modern Casual," or one of their other kid types.
Your kids' dept. was this tall the last time I saw you!... The $203B kids clothing industry is growing faster than adult-wear. And the opportunity is even bigger because Gymboree and Toys 'R' Us recently went bankrupt, leaving toddlers with no fashion direction. It's not just Walmart jumping in:
"Subscription" isn't a defensible advantage... Birchbox created the subscription box concept 9 years ago. Blue Apron ran with it in meal kits. Both are now struggling as competitors jump in because launching subscription services doesn't require a major investment. Now Walmart (and even Amazon) boast algorithm-focused fashion subscriptions. Stitch Fix is on notice.
That big T-Mobile & Sprint merger will reportedly be denied
You don't have my blessing... That's the word from the Dept. of Justice regarding T-Mobile and Sprint's planned merger, which was announced almost 1 year ago. According to the Wall Street Journal, the reason it's likely to get blocked is that combining the #3 and #4 wireless companies would threaten competition.
Like you and your S.O. post-move-in... Sprint and T-Mobile want to get on one plan to save costs. Merging would also pool resources so they could build out a 5G network (they've been repeating that argument to China-phobic politicians). But they'll also be under less pressure to offer low prices to customers. And antitrust laws aren't cool with that last part.
Wireless investors want this merger to happen... which is a reason why customers probably shouldn't. With less competition, big companies can set prices higher — Customers pay more, companies take more profits. And word that the deal's in jeopardy hit shares of the top four wireless companies, even though T-Mobile's CEO called the report "simply untrue":
What else we’re Snackin’
- Bigger: Netflix reveals it added 9.6M subscribers last quarter and downplays Disney+ concerns
- Fancy: Sequential Brands is selling Martha Stewart for $175M — and that rises to $215M if certain "goals" are met
- Green: Aurora Cannabis jumps 4% on hemp acquisition and a survey showing Americans want legalization
- Warm: Microsoft implements firm-wide carbon fee to lead on climate change
- Fuel: Oil is on a 6-week win streak. This is what it means for stocks
Wednesday
- China's GDP report
- Earnings from Pepsi, Morgan Stanley, and E-Trade
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Disclosure: An author of this Snacks owns stock of Amazon