Does Facebook Want In to China? | Tech Teardown - 3/7/14 | The Motley Fool

TL;DR

Leap Wireless, soon to be acquired by AT&T, is losing customers due to aggressive competition from T-Mobile.

Transcript

Aaron Kennedy here today with Evan new we're doing Tech tear down for Friday March 7th late last year Telecom giant AT&T said it would acquire leap Wireless for $1.2 billion in cash this comes years after AT&T's Infamous failed attempt to buy T-Mobile it now seems that T-Mobile is eating uh leap Wireless's lunch what's happening looks like they are... Read More

Key Insights

• 😀 Leap Wireless is facing customer losses due to competition from T-Mobile, which has expanded through mergers and network expansion.
• 🙈 AT&T's acquisition of Leap Wireless is seen as a necessary move to rescue the struggling company.
• 👤 Facebook is looking to expand into China and has shown interest in providing a good user experience for Chinese users by hiring someone who specializes in simplified Chinese.
• 🤱 The news feed redesign is an important product change for Facebook as it is where users spend most of their time.
• 🫠 Twitter has been experiencing declining ad prices, while Facebook has seen an increase in ad prices due to strong engagement and mobile growth.
• 🫠 BlackBerry's BBM messaging service is transitioning to an ad-supported model to monetize the service, but faces intense competition in the messaging market.
• 😘 Microsoft's reduced licensing fee for low-cost devices is an attempt to compete with Google's dominance in the operating system market.

Questions & Answers

Q: Why is Leap Wireless losing customers?

Leap Wireless is facing aggressive competition from T-Mobile, as well as challenges in keeping up with T-Mobile's network expansion. They have also attributed their customer losses to the merger between T-Mobile and Metro PCS.

Q: What is AT&T getting out of the acquisition?

AT&T is primarily focused on acquiring spectrum and strengthening their prepaid brand. They are also aiming to target the growing prepaid market as the subsidy model shifts.

Q: How does Facebook plan to expand into China?

Facebook is looking for someone who specializes in simplified Chinese, indicating their interest in providing a good user experience for Chinese users. They have been evaluating the possibility of making Facebook available in China for some time.

Q: What is the significance of the new news feed design for Facebook?

The news feed redesign is a significant move for Facebook as it is their core product. They have focused on streamlining and making it more engaging, taking cues from their mobile apps.

Summary & Key Takeaways

• Leap Wireless reported a loss of 92,000 net subscribers and 745,000 for the full year, attributing the losses to competition from T-Mobile.

• The aggressive competition and T-Mobile's merger with Metro PCS has led to Leap's struggle to keep up, resulting in a lack of ability to scale their customer base.

• AT&T's acquisition of Leap Wireless is seen as a necessary move for Leap investors due to their current financial situation.