Tech giants fill the headlines this week with Facebook attempting to connect the entire world, Google expanding into the hardware business and Twitter awaiting the highest bidder. Read more in this edition of Steady Investor’s Week
Untapped Potential – In a world of uncertainties, it is easy as investors to become skeptical of the future. We are constantly reminded of high debt levels, falling productivity, a weak recovery, and so on. If you ever get caught up in the mire of pessimism, sometimes it is helpful to take a step back and think about all of the untapped potential in the world today. We could run through several examples but will just focus on one today—internet access. If you think about how much more efficient/productive the workforce is now that we can access information instantly and communicate much more effectively, think about the effects once we get the entire world connected! Africa is the world’s fastest growing continent, and its blistering pace of growth is likely to continue—and its middle class will boom—as it gains more access. Enter Facebook, who is in discussions with multiple countries to demo drone projects in their continued effort to bring connectivity to remote regions of the world. Doing so could unlock new markets and create new economies out of nowhere—bringing more consumers and innovation to the world. That is how you achieve growth. Facebook says that trials could start as early as 2018, and this project is totally separate from its goals to use satellites to provide bandwidth to remote regions.
What is the “Hard Brexit”? – The terms “soft” Brexit and “hard” Brexit have been tossed around of late, as Prime Minister Theresa May addresses Britain’s next steps. She has called for evoking Article 50 (a formal and irrevocable request to leave the EU) by March 2017, which would mean Britain has to establish its new identity in Europe. A “soft” Brexit would call for Britain maintaining access to the free EU market while also allowing for the free movement of people and capital across borders. Theresa May campaigned on the opposite, though, where she wants British sovereignty, access to the free market and would allow Britain to set its own laws regarding regulation and immigration. That’s the “hard” Brexit. While it sounds great to British businesses and voters, it is also all talk. All 27 countries in the EU have said it’s all or nothing for Britain, and it is highly unlikely Britain can negotiate any access to the free market without also allowing free movement of people. These will be very interesting negotiations, indeed.
End of an Era for Twitter? – Is CEO Jack Dorsey losing his grip on Twitter? It appears that way, as the company has said its doors are wide open to bidders for the business. It is an interesting sign of the times when you consider that Yahoo is up for sale and Twitter, once thought of as a darling of the tech world whose name was mentioned alongside Facebook and Google, is now up for sale too. The question now is, who wants to buy it? Not many bidders so far. Google, Disney and Apple have basically taken their hats out of the ring, and the only potential suitor to emerge has been Salesforce. The value of Twitter is seen to be between $18-$30 billion.
Google Gets Into the Hardware Business – the quest for world dominance continues, as Google has now devoted part of its business to hardware. This week Google released a slew of new products in the smart-phone and virtual reality segment—the Pixel phone and Daydream View virtual reality headset. The tactic is clear – Google can merge its software offerings with hardware, making the choice easy for consumer…just do business with Google. Meanwhile, Blackberry announced an end to production of all products, and no one noticed. It’s important to remember – as with the Twitter story – that the life cycle of technology products (and companies) can be very short. As investors, it is important to stay on top of technology investments.
With tech giants pushing for innovation and expanding into new economies, many investors are concerned about the overall state of the economy and what it holds for the future. But, we at Zacks Investment Management do not get caught up in the headlines. Instead, we stick to the facts and always look to hard data to provide context for investing decisions. If you want to get an inside look into what we are seeing, download our Stock Market Outlook Report by clicking on the link below:
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