Wireless Battle Heats Up as Dow Drops

AT&T is lowering prices in response to T-Mobile, which is one reason it's lagging the Dow today.

Mar 10, 2014 at 3:30PM

The Dow Jones Industrial Average (DJINDICES:^DJI) started the week on a down note today -- falling 55 points in late trading -- after Chinese exports were reported to have fallen 18.1% from a year ago for an overall trade deficit.  

It should be noted that the Lunar New Year holiday fell mostly in February, which will impact production over the first two weeks of the month. So while the decline in exports seems sharp, when adjusted for the holiday it may not be as bad as it first appears.

Wireless battle continues
Dow wireless companies AT&T (NYSE:T) and Verizon (NYSE:VZ) are respectively down 0.25% and 0.5% today after the battle for customers intensified. AT&T announced over the weekend it is cutting the cost of its 2 GB Mobile Share Value data plan by $15, to $65 per month.

Before you get too excited, this is only for consumers who aren't under contract, meaning you must have a phone that's past its two-year contract or pay full price for the phone. The savings would be $360 over two years, which is about the same as the subsidy AT&T and Verizon give for high-end smartphones.

AT&T is trying to fight off a massive effort by T-Mobile (NASDAQ:TMUS) to steal customers by offering lower prices and no contracts. T-Mobile  just increased the 4G LTE data customers get in the base $50 plan from 500 MB to 1 GB and will even pay for new users to sever contracts with rivals.  

Thus far, the price battle has been between T-Mobile and AT&T, and like the $15 reduction in monthly costs, many of the new offers simply shift when customers are spending money.

Verizon Wireless has largely stayed out of the fray because it commands higher rates thanks to a larger 4G LTE network. But if AT&T and T-Mobile both begin to push lower prices without contracts Verizon may have to shift its strategy from pushing contracts.

For investors, the reaction today is negative, but it will take time to see how successful T-Mobile is in shaking up the wireless industry. AT&T and Verizon have huge infrastructure advantages that won't be easy to overcome. I wouldn't bet against these giants, even if T-Mobile is rattling the cages of the wireless industry right now.

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Travis Hoium manages an account that owns shares of AT&T; and Verizon Communications. The Motley Fool has no position in any of the stocks mentioned. 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.

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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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