almost 2 years ago • 3 mins
Verizon posted a mixed set of results on Friday, so if the US telecoms giant can’t beat the major streaming platforms, it might as well join them.
What does this mean?
Ever since the pandemic introduced people to the notion that they can still do their jobs effectively without sitting next to Keith from accounts, everyone’s wanted high-speed internet in their homes. And that was just as true last quarter: Verizon said it added a net 229,000 broadband customers in the segment’s biggest jump in over a decade. Problem is, it can’t stop losing cell phone and cable TV customers. That dragged on its total revenue, which came in just 2% higher than the same time last year. Investors booted up their computers, dialed up, and made their thoughts known half an hour later: they sent Verizon’s stock down.
Why should I care?
The bigger picture: Verizon bundles up.
The loss of cable TV customers reflects a longer-term shift away from traditional scheduled television toward on-demand streamers. So Verizon’s changing tack: it’s planning to partner up with streaming companies and offer their products as part of bigger phone, broadband, and TV bundles. It’s already struck a deal with Disney, and it announced last month that it’s launching a new service that’ll provide a range of subscriptions in one place. And since products like that should offer customers more reasons to stay, it could make it easier for Verizon to hike prices further down the line too.
Zooming out: The good old days.
If all else fails, Verizon could always just ditch its media business. That’s what rival AT&T did: it completed the sale of WarnerMedia this month, meaning it’s now returned to its roots as a true-blue telecom company. It’s just like old times: the newly focused business reported last week that it added far more phone customers than expected last quarter, and investors sent its stock up 4%.
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Data out on Friday showed that UK retail sales collapsed in March, with even Brits’ little luxuries starting to lose their flavor.
What does this mean?
Brits are known for their stiff upper lip, but even that’s beginning to tremble as they look at painful fuel receipts through misty eyes. That’s put them off making anything but necessary car trips, with sales of gas down 3.8% in March from the month before. Online sales were languishing as shoppers bought fewer nice-to-haves too, falling 7.9% in the biggest monthly drop-off since 2001. And even a 2.6% uptick in household goods sales – itself a sign homeowners are turning to DIY for short-term domestic fixes – wasn’t enough to undo the damage. Overall, retail sales fell 1.4% in March compared to the month before, when optimistic economists were hoping for a drop of just 0.3%.
Why should I care?
For markets: The pound falls out of favor.
Things are only going to get worse when energy bills and taxes rise this month, and don’t shoppers know it: data out Friday showed consumer confidence plunged to its lowest since the 2008 financial crisis this month. That has economists forecasting that the Bank of England will be less aggressive with interest rate hikes than previously thought – not good news for the British pound, which gets less appealing to international savers and investors when rates stay low. The data, then, was promptly followed by sterling hitting its lowest point against the US dollar since late 2020.
The bigger picture: The UK economy isn’t spit spot.
You can’t really understate the importance of consumer spending on the UK economy, so this slowdown is bound to take its toll on growth. In fact, economists predicted this week that the country’s economy will shrink by as much as 0.2% this quarter.
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