For my full commentary, check out http://zenanalyst.com/2018/06/17/weekly-review-6-15-2018/
Beside from the Trump administration clowning around with ZTE and China tariffs, the biggest news this week is the approval of the AT&T’s acquisition of Time Warner, which has broad implications for the market. The media was flooded with opinions on what this deal means. Columbia law professor, Tim Wu, published an article on the NYT arguing that the deal approval “implicitly encourages the rest of the industry to integrate as well” and increases the risk of “leaving a fully integrated industry immune to new competition” — in other words, this would be great for media investors. However, legendary media investor John Malone questions the wisdom of vertical integration, “If you are just forming a conglomerate by putting everything in the same bucket, it eliminates your flexibility, you’ve got tax problems, regulatory problems and a lot of problems that these companies operating autonomously don’t have.” But the most important opinion comes from AT&T CEO, Randall Stephenson, who sat down with CNBC after the approval was announced: watch it here.
One of the drivers of the AT&T / Time Warner deal is the increasing dominance tech giants — Amazon, Google, Facebook, Microsoft, Netflix et. al — whose rise caught most off guard. WSJ put out a piece demonstrating that large company dominance, as measured by market capitalization, has been greater in the past. I found the piece insightful, but I have several push backs. First, excluding the dot-com bubble, concentration has reached a 30-year plus high, and growing. Unlike the dot-com era, these tech giants are actually putting others out of business while continuing to grow rapidly. Second, the tech giants today — Apple, Microsoft Amazon, Alphabet, and Facebook — employ far fewer people per $ of profit generated than giants of the past, so the concentration of wealth and power is understated. For example, in the year 2000, GE, Walmart, and Exxon Mobile were among the top 5. Below is a chart from the WSJ article... click here to continue...
Submitted June 17, 2018 at 02:04PM by Keeppgoingg https://ift.tt/2th5gE3
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