Verizon, AT&T Lag as the Dow Hits a Snag

Telecoms fall, while JPMorgan Chase declines after weighing a potential divestment of its prepaid card business.

Jan 9, 2014 at 2:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks have bounced back somewhat from earlier losses, but the Dow Jones Industrial Average (DJINDICES:^DJI) has failed to escape the red so far today. The blue-chip index is down more than 45 points and most members in the red as of 2:15 p.m. EST, which is still a sharp improvement from earlier when it was down nearly 100 points from the open. Telecoms have taken a big hit, with both Verizon (NYSE:VZ) and AT&T (NYSE:T) dropping sharply, while JPMorgan Chase (NYSE:JPM) and other financials have also wandered into the red. Let's catch up on what you need to know.

T-Mobile takes aim at AT&T, Verizon
Verizon and AT&T stock have both fallen by nearly 2% after rival T-Mobile  (NASDAQ:TMUS) yesterday launched a shot across the two telecom giants' bows. T-Mobile offered to pay customers up to $350 per line to cover early termination fees for customers who abandon larger competitors for T-Mobile's network. AT&T has already perused this strategy, committing recently to paying up to $450 to customers who switch to its own network -- but T-Mobile has now raised the stakes of this bidding war even higher.

Today's drop isn't so much about T-Mobile's firepower in the battle for U.S. telecom customers: After all, the company's only the No. 4 wireless provider in the U.S., far behind leader Verizon and runner-up AT&T in customers. Verizon in particular has done a great job lately in driving growth higher, adding more than 900,000 new wireless customers in its most recent quarter and pushing wireless revenue up by 8%.

While customer growth continues, however, the bidding war for rivals' subscribers does mean that old standbys of the industry, such as early termination fees, could be moving on out. Networks will need to find new ways to retain customers and keep them away from opportunistic rivals in order to sustain wireless client growth.

In the financial sector, JPMorgan's down around 0.5% today as the bank ponders selling its prepaid card unit. JPMorgan is already declining to bring in interested new prepaid card users, but it's still servicing existing members. However, with the company's prepaid unit the victim of a hack last month -- an incident that led to JPMorgan issuing warnings to 465,000 card holders over potential breach of data -- the division is a prime candidate for a sell-off.

The bank's turned toward simplifying its operations lately in the wake of the 2012 "London Whale" incident that cost more than $6 billion in a failed derivatives bet. The plan's gone over well with investors so far: JPMorgan's stock has risen more than 28% over the past year, and focusing in on core business units should help the bank evolve as a sleeker and more efficient company -- with the added bonus of a better likelihood of avoiding messes like the London Whale event in the future.

The new banking idea that could change everything
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Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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