Verizon buys Frontier for $20 billion

welcome to seeking Alpha's Wall Street lunch our afternoon update on today's market Action News and Analysis good afternoon today is Thursday September 5th and I'm your host Kim Khan our top story so far Verizon announced the deal to acquire Frontier Communications in an allash transaction valued at $20 billion the telegam giant said the Strategic acquisition of the largest Pure Play fiber internet provider in the US will significantly expand Verizon's fiber footprint Across the Nation accelerating the company's delivery of Premium mobility and Broadband services to current and new customers Verizon will pay 3850 a share in cash a premium of 43.7% to frontier's 90-day volume weighted average share price on September 3rd 2024 the last trading day prior to Media reports regarding a potential acquisition Frontier down about 10% today after rocketing nearly 40% in the previous session on anticipation of the deal see Alpha analyst Jeremy lakos says the deal will add long-term value to Verizon shares but the timeline for closing and the regulatory risks have me waiting to invest while a good portion of this deal makes sense for both companies there is a regulatory Cloud that will likely hang over it for months it's important to note that in the last decade Verizon eventually negotiated a sale of its landline business to Frontier which in itself faced many regulatory hurdles before clearing and eventually blowing up on Frontier he said there was a raft of economic data this morning that over all ease some of the concerns about growth raised on Wednesday with the weak jolts report the stock and bond markets bounced around perhaps range bound going into the big Jaws report on Friday though weekly initial jobless claims fell a little more than expected down 5,000 to 227,000 continuing claims unexpectedly fell to 1.838m for 1.86 million that countered a very weak ADP report on August private pay rolls that showed a rise of just 999,000 while shy of a consensus of 140,000 the problem with the ADP report is its extremely weak correlation to the official numbers also on the labor front q2's productivity revision saw unit labor cost Revis down to a 0.4% rise from the initial estimate of up 0.9% and compared with a 4% gain in q1 Kevin Gordon strategist of Schwab says the current Trend in unit labor cost is definitively inconsistent with the Resurgence in core inflation in addition the ism index of services activity a much bigger part of the economy the manufacturing edged up to 51.5 in August up from 51.4 in July and Topping the 51.3 consensus among active stocks Chinese EV makers are gaining after Neo said Revenue Rose 98.9% in fiscal Q2 to 2.4 billion during the quarter better vehicle margin was offset by higher operating expenses gross margin was 99.7% compared to just 1% a year ago and 4.9% in fiscal q1 of 2024 notably Neo narrowed its net loss compared to a year ago due to the higher level of sales Neo said it expects to rack up deliveries of between 61 and 63,000 units in fiscal Q3 Jet Blue jumped after it updated its Guidance the company highlighted its operational performance over the summer travel season as evidenced by an improvement in ontime performance by approximately 10 points year-over-year JetBlue now sees Q3 capacity of down 5% to down 3% versus down 6% to down 3% prior Outlook and revenue growth or rather contraction of down 2.5 5% to down 1% versus down 5.5% to down 1.5% prior guidance foxcon Technology's August Revenue jumped 32.8 1% year-over-year driven by demand for servers powering AI products the Apple supplier said the third quarter is expected to generate growth compared to the second quarter and the same period last year and the current visibility is better than previously estimated sticking with AI Nvidia said late Wednesday it did not receive a subpoena from the justice department regarding Anti-Trust probe despite report that it had Nvidia wins on Merit as reflected in our Benchmark results and value to customers and customers can choose whatever solution is best for them an invidious spokesperson told Seeking Alpha we have inquired with the US Department of Justice and have not been subpoena nonetheless we are happy to answer any questions Regulators may have about our business in other news of note Tesla unveil plans to launch his full self-driving technology in China and Europe in the first quarter of 2025 pending regulatory approval the announcement was made by Tesla's AI division laying a road map of upcoming smart initiatives in a social media post on platform X this timeline represents a slight Delay from the earlier expectation for 2024 rollout Tesla plans to offer FSD as a monthly subscription service in addition to the current onetime purchase option which could give the company a new Revenue stream amid increasing competition and in the Wall Street research Corner BFA is out with a list of global Contender and Defender stocks a strategy that looks into earnings and price momentum the bottomup stock selection model showed preference towards the global financials and Technology sectors contenders have more exposure to the momentum Style with less risk and Defenders are more skewed towards risk and have very low momentum the global contenders have outperformed the Defenders by 19.3% year-to day among the contenders are Novo Nordisk broadcom GM DR Horton JP Morgan Chase meta platforms and Tyson Foods The Defenders include diio Caesar's entertainment Intel match group and snowflake see the entire list of 60 stocks on Seeking Alpha that link will be in the show notes as usual that's all for today's Wall Street lunch look for links for stories in the show notes section don't forget these episodes will be up with transcriptions at seeking alpha.com WSB enjoin the highest level discussion of any stock or ETF with our community of serious investors like you find us at seeking ala.com subscriptions but