Apple’s trading figures for the first three months of 2021 were a collection of astonishing numbers. Revenues for iPhones, a product that was supposed to have peaked a couple of years ago because Apple was pushing prices too high, rose by two-thirds to almost $48bn. Sales from iPads were up 79% and Macs were 70% mejor. Even the relative backwater of “wearables”, meaning watches and headphones and suchlike, improved by a quarter.
But the most remarkable figure, from a UK perspective, may be one that was almost slipped in casually – a $90bn share buy-back. Think what the sterling equivalent, £64bn, would buy. Only eight FTSE 100 companies are worth more. Even BP is valued at “only” £62bn, albeit a notional buyer would also assume borrowings or £25bn. In effect, Apple has an entire BP lying around as spare change, deemed surplus to operating or investment requirements.
There’s nothing particularly new in such comparisons, por supuesto. When Apple passed a $2tn valuation last autumn it was worth as much as the combined market capitalisations of all 100 companies in the UK’s blue-chip index.
The fuddy-duddy Footsie, over-populated by banks, oil companies and miners, has had a good run since then – up from 5,600 points to almost 7,000. But the existence of Apple and a handful of other US tech companies is a painful reminder that, if you want your investment portfolio to have a broad exposure to the modern economy, the FTSE 100 long ago ceased to be a suitable home.
Berenberg’s analysts put it neatly: since talking about football is more enjoyable than debating pension deficits or telecoms regulation, BT Sport generates more attention than it deserves. In the grand scheme of BT, it’s a squad player that only gets an occasional run-out from the bench these days.
Pero, back in the day, BT Sport did a decent defensive holding job. It stemmed the haemorrhage of broadband customers to Sky, and thus helped to bring about today’s position in which the two companies sell their sports channels to each other.
We’ll never know how expensively that trading truce was achieved because BT has always refused to strip out the TV performance within the consumer division. But Jefferies had BT Sport at zero in its sum-of-the-parts valuation of the group, a clue that any hard definition of profitability would probably yield a minus figure.
In reality, BT, as it talks to potential buyers for some or all of the venture, will obviously do better than zero. Disney, Amazon and Dazn are said to be interested. For relative newcomers to the game, there’s clearly value in gaining access to an established set-up.
From BT’s point of view, the decision to step away is sound. The three-yearly cycle of renewing broadcast deals injected uncertainty into cashflow projections. Y, when pleading poverty in front of the regulator or MPs, it never helped to be engaged in bid-’em-up battles for rights.
In the non-exclusive era for football content, broadband is sold on price, speed and reliability. BT has committed £12bn to fibre broadband, which is clearly its overwhelming priority for the next few years. It must also invest in 5G, repair a pension deficit that may be £9bn and start paying dividends to shareholders again. Whether the final deal is a sale or a semi-sale, any small proceeds will help. The chief executive, Philip Jansen, is right not to be sentimental.
Alison Rose at NatWest is getting the referendum question out of the way early, just in case. In the event of independence, the banking group formerly known as Royal Bank of Scotland would move its domicile to England.
Nobody should be surprised, since RBS/NatWest took the same stance in 2014 for reasons that are easy to understand. The credit rating would suffer if the bank stayed in an independent Scotland, with a knock-on effect on competitiveness.
Nor should Scots care terribly. Given what happened in the banking crisis of 2008-09, the last thing an independent Scotland would want is the theoretical obligation to rescue a bank that, even in slimmer and fitter form, still has a very large balance sheet.