“Radio waves do not linger atmospherically. They drift ever outward in spherical form,” our so-called manager retorts.
“Physical objects aren’t supposed to occupy two places simultaneously either. But they do. Even Sir Issac didn’t know that one.”
“Radio waves are not quantum mechanics. They’re EM waves.”
Of course. Radio waves are not subatomic. But some gamma rays are. But then, they neither “linger” nor turn corners. Yet isn’t that precisely what he was suggesting? We push past the crowded mail slots and toward the bank of brass elevators.
“When the going gets tough, they go short wave. How do you suppose they called an SOS on the Deep Water Horizon? Same for ships attempting to rescue platform workers.”
“I know. Radio waves don’t linger. Maybe they just malinger a bit. Can you prove they don’t?”
You want tech? Here’s some. Short wave radio comprises everything from high MF to the end of HF, or 1.7-30MHZ. It’s noisy, signals constantly “drift,” thus requiring constant auto-retuning. Yet short wave is still a vital com link for scads of operations and entities. In equity trading terms, short wave radio is the equivalent of a ticker-tape machine. Look that one up. Gomez Addams had his own. But of course, he was rich, and he had a hot life-mate.
“Radio waves never die,” our accountant repeats. “They simply drift out into space eternally. They’re like Batman, always moving but invisible.”
People will tell you that the electromagnetic spectrum is endless. Technology developers can only wish that were true. The scale has limits, and thus so does the bandwidth available for human use. The scale from low to high goes radio waves, microwaves, visible light, infrared, ultraviolet, X-rays, and gamma rays. Long waves lengths stretch thousands of kilometers, while short waves end at a fraction of the diameter of a atom’s nucleus. Who cares? Everyone paying attention. Why? Because it’s all we have.
Don’t hold your breath for the IOT, or TV Everywhere. Everybody now knows the IOT will gobble incredible amounts of hardware and bandwidth. Our current “connected” world is about to look like a joke, when compared to what’s now deep in the development pipe. True hands-free auto travel is at least a decade out. Remember that guy who was operating his Model S hands free? More of that is inevitable.
“Limits to usable bandwidth will continue to push things like ATT’s look at landline potential. Can you push an HD signal down a copper string?” he tuts.
Guess who paid the AT&T share of this stadium after the tax cuts? That’s right. We all did.
Subsidizing NFL team owners is not our job, or tax-base efficient. Anyone remember Howard Cosell? Howard fully explained the public financing of stadiums scam. Willy Bush did one of those public rip-offs with the Rangers. Howard once asked “Is football a game or a religion?” He then answered his own incisive question. “Sports are a microcosm of life.” And they are.
Anyone who read our premiere three-part piece “Pirates of Coax” may recall Stockjaw’s long-held position concerning ATT. Now we own a chunk. Is T yet considered a “blue chip?” Att grew into nationwide monopoly and the feds chopped it up. That’s when we got the “baby bells.” Our opinion has been solidly negative. T has to us seemed far too big to manage efficiently. At best it can hope for low single-digit growth, if everything goes well.
We’ve liked T at the same level as Exxon. That means not at all. They appear to share at least two issues. Both are gigantic, thus face the “law of large numbers.” The larger the market cap, the more juice required to move the needle. No way exists around this fact. Second, these companies are huge bureaucracies, thus they suffer from intrinsic inefficiencies of same.
Scanning for dividends and “crammers.”
All portfolios do better when they include at least one dividend payer. Dividends represent 40% of total returns over time. T’s at 5.5% and they can pay. We like that. And guess what? T turned in a super strong Q4, 2017. That’s right. Listen to the conference call. Find out link to T Investor Relations in Our Portfolio. Listen for tone, particularly during the Q&A. Analysts questions never fail to revel underlying opinion. It’s a very good sign when analysts congratulates a company on the call. You can also hear analysts’s scoffing, in the form of questions asked.
What’s T thinking? Time-Warner. They want it, bad, and state clearly their willingness to battle in court. Cost control. T sounds almost fixated on further reducing “cost per megabyte.” The company says they have “a lot of room” there, while having already achieved great reductions.
ATT, along with Alphabet, is pushing fiber. Very expensive. T is building a nation-wide foundation for 5G. More importantly, the company is fully committed to video, particularly linking “premium video with mobile.” The combination cuts “churn” or subscriber loss, in half. They are working with Direct TV for their mobile subscribers. When coupled, churn drops to 0.89%. That’s low.
However, the real eye-opener on this call is the impact of the tax change. T states a $20b. direct benefit, and an effective 2018 tax rate of 23%. They’ve committed $200 million to paying “front line workers,” and $800 million more to some benefit program. In addition, the tax program will directly add another $1b. to 2018 free cash flow. Very nice.
Visible light forms part of the vast electromagnetic spectrum. Sound does not.
Want a dividend payer? We do. We bought T on sale weeks back. It’s yet underwater by more than 1%. We think we’ll stay–for now. For investors wondering about income and dividend safety, T may be for you. Keep in mind, ATT may very well be in court this year over the massive Time-Warner deal. They may not win. If so, we feel the share price will suffer–3% immediately. Yet there’s time before that happens, and that development will be sufficiently telegraphed to allow an orderly exit.
Ever called Direct TV? We have. We’d accept delivery of an avalanche of scat before calling again. Direct TV is central to the company’s future. Listen to the call. The company’s credit rating is degraded. They are talking with rating agencies. The company also clearly states a fixed focus on “total profit,” rather than EBITDA, or revenue. They claim they will have the free cash to drive growth and improve industry positioning. Looks like they will.
Gettin’ to the ugly. Once a commencement speaker stared at the graduates and promptly informed them that “You are now occupying the highest moral/ethical point now. It’s all downhill from here.” Ah, yeah, probably. Life is complicated and AT&T one of the least ethical large caps we know. Remember “cramming?” We do. So, who wants ethics when you can get dividends? Hum?
Our STOCkJAW Conference Call Rating:
JAM OF THE DAY; STEPHEN KUMMER, “LET’S FALL IN LOVE.”
Thanks for reading. Keep looking.
Don’t fight market waves. Relax, like H2O. Rolling with volatility like water yo.