Living on a prayer

The BeefThe Beef ·

Good morning everyone,

Today we’re discussing Ford gutting its corporate ranks and the FCC giving the Sprint/T-Mobile tie-up a fighting chance.

Enjoy the next 4 minutes and 11 seconds.

Keep raging,
Jeff & Jason


THE MARKETS


THE HEADLINES

Living on a prayer

Image result for halfway there gif

After yesterday’s surprise announcement by the FCC, Sprint and T-Mobile are halfway there …

Ajit Pai, Chairman of the FCC, gave Sprint and T-Mobile the green light to create a truly third-rate mobile carrier. This comes just over a year after the two companies announced a merger, marking the third attempt in four years.

The $26B deal was given approval after the companies made two key commitments to the FCC:

  • The post-merger company would make additional investments to expand service to rural America
  • That 75% of the American population will have access to 5G service within three years

So, the deal’s closed?

As it turns out, the FCC only accounts for half of the approval necessary for two telecoms to make it official. The FCC’s blessing, which is dependent on the merger’s likelihood of serving the public’s interest, must be confirmed by the Justice Department’s nod of approval.

The takes into consideration whether or not the deal would harm competition. And while the two departments rarely differ in opinion, the FCC and the JD have historically stood in the way of mergers that would decrease the number of major wireless carriers below four. Read: the deal is living on a prayer.

Sprint and T-Mobile shares were up 18.87% and 3.87% respectively on the day.

Bottom line: “Whoever buys Boost Mobile from Sprint better still produce those fire commercials.” – Jason


White collar crime

It’s all fun and games until “redundancies” affect Karen in compliance. Ford has plans to lay off some 7k white-collar employees worldwide, accounting for approximately 10% of its global corporate workforce.

The layoffs will affect roughly 2.3k working stiffs Stateside, 1.5k of which were offered voluntary buyouts late last year. But the Michael Scott’s of the world aren’t the only ones on the chopping block. As much as twenty percent of upper-level execs may find themselves turning tricks in Detroit to pay for their kid’s private school. Nobody with the last name “Ford” will be affected.

The good news? The layoffs will be quick (but most certainly not painless). Almost 1k of the cuts will happen this week. Ford out here redefining “long weekend.”

But why?

Well, it probably has a lot to do with a projected $600M annual cost savings which oughta help reverse Ford’s falling profitability. CEO Jim Hackett cited a need to “reduce bureaucracy, empower managers, speed decision making, focus on the most valuable work, and cut costs.”

Of course, what he really meant to say is that the US’ second-largest automaker needs to stop cranking out gas-guzzling pickups that only the Marlboro Man could love and re-tool to begin churning out EVs and autonomous vehicles … two areas where it lags its largest competitors.

Bottom line: “Remember when Ford’s biggest issue was Firestone tires shredding at high speeds? I miss the good old days.” – Jeff


You can go your own (Hua)wei

Google just dealt a potentially Jon Snow-like blow to Chinese tech giant Huawei by announcing that it is suspending business that requires the transfer of hardware, software, and technical services.

The Chinese maker of smartphones, apps, and other technology products has been in Uncle Sam’s crosshairs for violating US sanctions on Iran, during these contentious times between Beijing and DC.

Just last week Huawei had been identified along with ZTE and the Chinese government as potential security risks. Via executive order, President Trump made it damn near impossible for certain enemies of the state (looking at you, Huawei) to sell telecom equipment in the US.

JK!

After all the hoopla, late last night the US announced it may grant exemptions to its ban on Huawei. Turns out the company provides more essential items to the US than the land of the free initially realized.

Although POTUS is pumping the breaks in hopes of minimizing worldwide telecom disruption, the pullback certainly won’t hurt the US and China’s ongoing trade convos.

Bottom line: “When you look up ‘power moves,’ in the dictionary, this is what you see.” – Jason


IN OTHER NEWS

  • Eight years after its first episode, the long-awaited finale of Game of Thrones aired on Sunday. Whether you loved it or hated it, chances are you tuned in along with an HBO-record-setting 19.3M other folks … unless, of course, you were in China. The finale was scrubbed from Tencent Video, the exclusive streaming provider of HBO in China. Tencent blamed streaming issues, but HBO believes that a little trade dispute might have had something to do with it.
  • Snap has a new CFO after the departure of Tim Stone, who left the firm in January after less than a year on the job. Derek Andersen, Snap’s new master of coin, has been the company’s VP of finance since July. Previously, Andersen had been a VP of finance over at Amazon, with a stint at Fox Interactive Media prior to that.
  • The SEC loves to fine financial institutions. It’s kind of their thing. The only problem? According to agency statistics, in the five fiscal years ending in 2018, the department has only collected on 55% of the more than $20B fines levied on Wall St. rule breakers. In 2018 alone, the agency collected just 28% of over $4B in fines, including a $1.7B settlement against Petrobras. Pot, meet kettle.
  • Bitcoin is back from its “flash crash,” rising 17% on Monday to break the $8k mark, again. The OG cryptocurrency has more than doubled in price this year due to the increasing number of traditional Wall Street banks willing to take a chance on it, and the blockchain tech it’s built on. And it’s not alone. Other cryptocurrencies, like Ether, have also seen double-digit increases this year as the technology goes mainstream. Andddd here come all HODLers.

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