March 25, 2023

DealBook: Sprint Shares Fall on Report of Possible Counterbid for MetroPCS

Customers lined up to purchase an iPhone at the Sprint store in San Francisco.Eric Risberg/Associated PressCustomers lined up to purchase an iPhone at the Sprint store in San Francisco.

4:50 p.m. | Updated

If Sprint Nextel is seriously weighing a counteroffer for MetroPCS, its shareholders didn’t appear particularly enthusiastic — at least at first.

Shares of Sprint closed down 2.1 percent in trading on Thursday, after Bloomberg News reported that Sprint was weighing a potential challenge to T-Mobile USA’s proposed merger with MetroPCS. The deliberations are at an early stage, according to the news report.

Strangely enough, MetroPCS shares didn’t immediately receive the customary rise that accompanies speculation that another suitor may emerge. Soon after the report, they were down 2.6 percent. The shares, however, rallied late in the trading day, and closed up 3.7 percent, at $12.69.

A spokesman for Sprint declined to comment.

If MetroPCS were to complete its merger with T-Mobile, it would bolster the strength of its business as it battles with larger rivals like Verizon Wireless and ATT. Moreover, it would leave Sprint with few options if it wants to grow through acquisitions, something that the company’s chief executive hinted at last month.

Sprint has been hunting for additional wireless spectrum as it builds out its Long Term Evolution service, which would provide the high data speeds used by the latest generation of smartphones. Many analysts had seen MetroPCS as a good complement, given its abundance of network capacity and its use of the same CDMA cellphone technology.

Sprint and MetroPCS nearly merged earlier this year, in a stock-and-cash deal that was scuppered at the last minute by Sprint’s board.

Industry bankers have said that Sprint may make another run at the company it left at the altar. There aren’t exceptional restrictions preventing such a move: MetroPCS would owe T-Mobile’s parent, Deutsche Telekom, a $150 million breakup fee if it accepted a deal from another suitor.

But some in the industry expressed skepticism that Sprint would be able to carry out a deal it had already walked away from, despite the benefits that a merger with MetroPCS would bring.

“This deal is substantially more complicated than what was contemplated six months ago, and Deutsche Telekom still wanted to go forward,” one person close to MetroPCS told DealBook on Wednesday.

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Disruptions: Will Apple Be the First to Break $1 Trillion?

Timothy D. Cook, Apple's chief executive, at the introduction of the iPhone 5.Eric Risberg/Associated Press Timothy D. Cook, Apple’s chief executive, at the introduction of the iPhone 5.

If Apple continues on its current trajectory, something remarkable might happen on April 9, 2015, at around 11 a.m.

That is, statisticians and investors I’ve spoken with say, a conservative estimate of when Apple could become the first company ever to be valued at $1 trillion. (Yes, you read that correctly: the number one, followed by 12 zeros.)

Other analysts are making even more aggressive estimates for the company’s value, which, as of Friday, was $656 billion. Those people put the trillion-dollar mark at less than a year from now: Aug. 16, 2013.

“It’s hard to imagine Apple growing any faster than it has grown on both the release of the iPad and iPhone,” said Michael E. Driscoll, chief executive of Metamarkets, a big data and predictive analytics company, and one of the people betting Apple will top $1 trillion in 2015.

Estimating when, or if, Apple will become the first to be worth $1 trillion is a bit of a parlor game, but we can all likely agree on one fact: today, it is a juggernaut.

Not long ago, Apple was a boutique PC maker. Since then, it has rolled over almost every company in its path, first with music players, then with cellphones and, more recently, with laptops. Nokia, Sony, Research in Motion, Dell and Hewlett-Packard have all watched open-mouthed as Apple took markets they thought were secured. Each time, Apple’s stock rose and their stock fell.

“They are certainly a different kind of company,” said Walter Piecyk, a wireless research analyst at BTIG Research. But, he warned: “So was Nokia in the late ’90s. No one thought they’d ever be challenged, and look at where they are today.”

Even with this growth, there is another possibility: that Apple never reaches $1 trillion. “In a worst-case scenario, Apple could befall the fate of Microsoft, which had a similarly dizzying peak in late 1999,” Mr. Driscoll said. “In this scenario, it will never happen.”

If $1 trillion were the peak of Mount Everest, Microsoft would have been rising through the highest base camp in December 1999, when its market capitalization hit an all-time high of $616.3 billion. Since then, the company has slid down the side of the mountain and is currently valued at a mere $261 billion.

Indeed, the flap over the poor-quality maps on the iPhone 5 has led some people to wonder if Apple has already jumped the shark. But remember how well it has weathered other challenges, like poorly functioning antennas and Siri’s erratic behavior.

Apple is different from Microsoft. “When Microsoft peaked in 2000, it had 20 years running the PC revolution. We’re essentially only five years into the smartphone revolution,” said Charles S. Wallman, a securities analyst who runs an investment group in Middleton, Wis. “Apple has 435 million customers based on the number of credit cards in iTunes. That’s 6 percent of the world’s population. It’s not a stretch to say it can get to 10 or 12 percent of the world’s population.” (Before we go any further, stop and reflect on the power that gives Apple.)

Even if Apple didn’t enter any new product categories, it could reach $1 trillion by doubling its sales. That’s hard for a big company, but in many respects, it is already happening. According to the latest statistics released by I.H.S. iSuppli, a research company, the Apple iPad accounts for nearly 70 percent of the tablet market. BTIG Research predicts Apple will sell 45 million iPhones in the December quarter alone. (During the same quarter last year, the company sold 37 million iPhones, doubling its revenue from a year earlier.)

While it used to be a presence in the United States and a nobody overseas, Apple is now rolling out products like the iPhone 5 worldwide on the same day. The company will also, predictably, continue to increase its global retail division of 388 stores. These stores make an average of $5,647 in sales per square foot. By comparison, shopping malls in the United States make an average of $341 in sales per square foot.

The company will continue to grow in China, too, where many of the more than one billion people who own mobile phones are upgrading to smartphones.

And don’t forget those clunky old PCs. While other computer makers have lost ground, sales of Macs have grown each quarter for the past six years.
And none of these staggering drivers of growth consider Apple entering entirely new markets.

“When we invented the car, it was a substitute for horses, but it was the second phase of the car revolution — when we invent things around the cars like gas stations and drive-ins — that created new business markets,” Mr. Wallman said. “We’re seeing this happen now with the technology we have in our hands. We’re entering the second phase of this revolution, where entirely new markets will be created, and Apple could create those.”

For instance, Apple could transform the television industry, making its own TV set built on iOS, which analysts estimate could bring in another $20 billion a year in revenue. Or it could try to reinvent money itself, turning on the 435 million credit cards it has on file and enabling mobile payments. And there are consumer electronics areas that haven’t even been invented yet, like wearable computing.

When Apple first introduced the iPhone, people slept in the streets to buy one. Five years later, people are still lining the streets to snatch the latest update, even though it is only a slight variation on the one before it. A company that can pull that off, selling two million iPhones in the first 24 hours, might be worth $1 trillion in no time at all.

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Bits Blog: Zuckerberg Acknowledges ‘Disappointing’ Wall Street

Mark Zuckerberg at the TechCrunch conference Tuesday.Eric Risberg/Associated PressMark Zuckerberg at the TechCrunch conference Tuesday.

SAN FRANCISCO — Mark Zuckerberg spoke to a hometown crowd here Tuesday afternoon, acknowledging his company’s “disappointing” performance on Wall Street, hinting at new moneymaking strategies, and casting his company as one that continued to build new things in the face of criticism.

“I would rather be in the cycle where people underestimate us,” he said at an annual conference sponsored by TechCrunch, the technology blog.

It was Mr. Zuckerberg’s first public appearance since Facebook made its debut on Wall Street in May, only to see its stock price fall fast and hard. But his remarks seemed to have a positive effect; immediately after he spoke, Facebook shares rose about 3 percent in after-hours trading.

Still, Facebook shares are now worth roughly half of the public offering price, and Mr. Zuckerberg, the company’s chief executive and co-founder, is under intense pressure to restore its credibility among investors, a problem he acknowledged.

“The performance of the stock has obviously been disappointing,” he said at the conference. “We care about our shareholders.”

In a jocular, half-hour question-and-answer session with the blogger-turned-investor Michael Arrington, Mr. Zuckerberg — talking at top speed and dressed in his usual gray T-shirt and jeans — dropped a few hints about Facebook’s plans, and said that the site was handling up to a billion search queries by users every day.

Search is Google’s principal advantage, but Mr. Zuckerberg said a team of engineers within Facebook was working on improving Facebook’s search tool to vet, for instance, restaurant recommendations from friends. “At some point we’ll do it,” he said.

He sought to cast Facebook as a company with a promising future on mobile phones — and himself as an entrepreneur who did not entirely eschew moneymaking.

“Building a mission and building a business goes hand in hand,” he said. “We are about doing both.”

When Facebook announced its bid to go public earlier this year, Mr. Zuckerberg famously declared in a letter to would-be investors that his company’s mission was not just to make money for its own sake. At the conference he said he had composed that letter on his mobile device. “I do everything on my phone,” he said.

But he said the company was not making its own phone.

Facebook came out of the box last May with an extraordinary valuation of over $100 billion. Among investors, expectations ran extraordinarily high that Facebook would accelerate profits. That didn’t happen.

Revenue grew, but not as explosively as before the I.P.O. Wall Street worried about Facebook’s ability to make money on the mobile platform, because its users were increasingly logging in on their phones and tablets. And its social gaming partner, Zynga, posted dismal results this summer, which hurt Facebook’s own stock.

Even as he sought to assuage Wall Street, he used Tuesday’s public appearance to appeal to the coders in the conference crowd, saying now is a “great time” to work at Facebook. New employees, he suggested, would be rewarded with more shares, as a way to compensate for the low price of those shares.

Some analysts think Facebook’s stock could fall more. The investment firm Stifel suggested in August that Facebook might be worth buying at $16.

Mr. Zuckerberg said he thought the company should be judged on its lasting impact, not just its stock price.

“Ten, 20 years from now, the legacy of this company should be, we have connected everyone in the world,” he said. “That’s a lot.”

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