Big Technology Podcast - Apple's China Problem, Its Tenuous Valuation, And The iPhone 15 — With Walter Piecyk

Episode Date: September 8, 2023

Walter Piecyk is a partner at LightShed Partners and GP at LightShed Ventures. He joins Big Technology Podcast for a special episode looking entirely at Apple as the company lost $200 billion in market cap this week. In this episode, we break down Apple's entanglements in China, its expensive share price, and what to expect with next week's iPhone 15 launch. Stay tuned for the second half where we discuss Charter's dispute with ESPN at the end. 

A leading Apple analyst joins to talk about the company's $200 billion market cap plunge and what's coming up as it reveals the iPhone 15, all that and more coming up right after this. Welcome to Big Technology Podcast Friday edition where we break down the week's news in our traditional cool-headed and nuanced format. This week, a special episode with a great analyst we're going to focus entirely on Apple, which shows the biggest story in tech and the market this week. It's dropped tremendously in the market. It's gone down $200 billion. I mean, it was at $3 trillion, so it can afford to lose a little bit, you would think.

But the big news is that it has really exceptional weakness in China that's starting to be revealed in a very public way and some challengers and plenty more to discuss. Joining us today, we have a special guest with us, Walter Pichick. He's a partner at Lightshed Partners and the GP at Lightshed Ventures, a real bear on Apple. this is going to be a fun conversation. Well, welcome to the show. Thanks. Thanks for having me. So let's start with what's going on with Apple. You know, the stock plunges. Everyone's trying to figure out why. A couple things bubble up in China. First is that China has banned government employees from using the iPhone. And then we learn that it might extend beyond that to even state funded companies. So can you take us into what's happening there? I mean, is that really a reason for the stock to fall so much?

I mean, I'm not sure that that event in and of itself is creates enough of change. in numbers for analyst estimates. I don't think you've seen any analyst yet, or I don't think they will next week come out and cut numbers. It's obviously hard to gauge because, okay, you can't use your iPhone in a government agency. It doesn't mean you can't not use or use it outside that agency, at least yet. But I think that the concern that investors would have is kind of how much does this, what's the slippery slope? What's the next step that China takes? What's the next step that the U.S. takes in terms of restriction. Remember, the root of this is the banning of Huawei. There's obviously been discussion on the use of TikTok within government

agencies in this country. What's interesting is that the Chinese government has a lot of power. I've covered this industry really basically since the mid-90s. And, you know, there's times even in China within existing operators. If one teleco operator gets too many subscribers and the government would like balance, they have a way of influencing market share shifts in between companies within their own country and then obviously, you know, the shares within the device sellers, whether it's a U.S. company versus a Chinese company. So I think the bottom line is that's a long way of saying like what happened isn't necessarily material in terms of, you know, negatively impacting Apple's earnings. It's not going to cut 15% or 10% out of Apple's earnings. It's just

highlighting that as things ratchet up between the U.S. and China, you know, there's a lot of potential risk there. And I was spending most of the week trying to figure out who has the leverage here, right? Because Apple has 20% of its business in China. That's huge percentage. And it has a tremendous amount of manufacturing there, which it's been trying to diversify, but it's really in the early stages. Then you have China, right? People do like the iPhone there. It's a very popular phone. And Apple is responsible for millions of jobs. So it's not like China's going to say Apple get out of the country. But it's showing the company, hey, listen, you know, or really showing the U.S. like your big companies, in some ways your economy, I mean, Apple's 7% of the S&P 500,

I think 11% of NASDAQ, right? So your country, your company's health depends on our markets. And we have the power to do what we want to them when we want to. So this is obviously a leverage play. It doesn't seem like either, you know, there's going to be a big divorce. But like, like, Who do you think has the power here? And why do you think anybody would even risk that relationship, given how important it is to both? I mean, I think one of the key points of those multiple points that you mentioned was the number of jobs that Apple creates in China. So there's effectively a codependency between the company and the country. So to your point, like, as China ratchets it ratchets up against the U.S.

and using Apple in some ways, there might be some limitations in terms of the impact that they can have on their own economy. On the flip side, you know, I've heard some talking heads, you know, say like, oh, you know, they can just, Apple can just snap their fingers

and pull manufacturing out of China. It doesn't work that way. I mean, it takes a while to get plants up to have them be able to produce iPhones that are high quality, right? There's a lot of times when you talk about good margins, it's managed, it's the expertise that Tim Cook,

the CEO of Apple has in managing that supply chain in order to have, you know, quality product. You just don't change your manufacturing overnight. So I think there's a very strong codependency between, you know, Apple and China. The thing that is a blind spot, I think, for me and all investors is we're still dealing with governments at a higher level. And there's, you know, this kind of who's going to be the leader in AI and what can be AI, you know, as a technology. How can it be used by the military? And I think, you know, even if there is this codependency, who knows? Like, am I a political, do I know enough about politics and know how much China is willing to take on pain if they see a larger, longer term goal in terms of making sure that they have the technologies that they need? And they're not restricted by the U.S. government in terms of AI development or, you know, the use of some of their products in the U.S. by U.S. consumers. kind of a controversial question but you know the u.s has been trying to cut off china from uh and has been cutting off china from basically all the chips that you need to build advanced artificial

intelligence the chips that you need to build fast smartphones we're going to talk about that next and there's been this big campaign against tictock in the u.s i mean obviously china feels and here's all this do you think the u.s is overstepping here i mean there's there are consequences in some ways to these statements and actions and there there can be there's this maybe like the punch back, beginning of the punch back. I mean, I heard, again, I heard someone say like, oh, this is all a response to what we did. Like, let's not forget the number of U.S. companies that have social media apps that are restricted in China. So, you know, if you want to go for like a tit for tat in terms of who did what first, I mean, I think it goes both ways.

But again, U.S. companies are getting restricted. And that's what, you know, not to get off topic, but let's look at what the FTC is doing when they're looking at, you know, the antitrust issues that they have with some of the companies that Lina Khan is going after, and they're not looking at it on the more global basis where, let's say you restrict, you know, EA or, you know, whoever Microsoft is buying versus to the benefit of Sony, which was not a U.S. company, not EA. Activision. Sorry.

Activition. Sorry. Brain fart there. Yeah. So, I mean, these things, I think. I think all come to play. So I wouldn't blame necessarily one side versus another. But as an American citizen, I'm surely aware of the restrictions that U.S. companies have had in operating in that country.

No doubt. I mean, I guess it's clear that the U.S. companies are restricted there, but they have a government that's more willing to take swings that ours is not. So does the U.S. need to pump the brakes a little bit to avoid retribution? Yeah, these are trade issues in large part. You know, they are, I think, wrapped up in a lot of times, you know, public safety or free speech or things like that. But at the end of the day, trade is a big part of that. And we do have an election coming up. And there's been a lot of discussion over TikTok and some of these other things.

So what we've seen in the election cycles of our country is not finding that necessarily middle ground, but going one way or the other to, dial up the rhetoric and maybe take some actions, you know, that will resonate with voters in an upcoming election. So I think that has to be kind of factored in, whether what they should do or shouldn't do. I mean, you know, then you're asking me to do to run the public policy. It's always fun. Yeah, I mean, but at some point, you know, if we're at the same time getting back to FTC, trying to restrict our own companies when, you know, foreign countries are restricting

our U.S. companies in those markets, I would think that there might be, there should be maybe some alteration in how we approach that. It doesn't seem to me that it's going to be a case where, you know, China just says no more iPhones than China. I mean, that would be totally drastic and fairly unprecedented, I think, and are like globalized, but steadily de-globalizing economy. So I guess you can't roll it out completely. It seems unlikely. I mean, with the U.S. just sorry to interrupt you, but the U.S. has banned, you know, infrastructure purchases from, you know, these Chinese companies and has funded the existing infrastructure to be ripped out of existing teleco networks. So when you talk about the kind of tit for tat and back and forth, I mean,

obviously it's not the same scale as, you know, the number of phones that Apple sells in China, but it's not like technology has not been imports or exports that's not been. been discussed as, you know, something that is at risk of ban in the past where it certainly is a possibility. Again, I agree with you. Right. Low risk of that, but still can't, can't roll it out altogether. So I think we should definitely talk about like some of these, you know, technology bans. And we'll do that in a second. But the thing I was getting at on this point was that the thing that seems more likely and the thing that surprised me in my research, as I was researching, you and I were both on CNBC this week talking about it.

I actually think that, you know, I appreciate it watching your comments more than I think the things that I said. But as I was researching, one of the things that I found so fascinating was that, well, let's just get into it. There's a faster Huawei phone called the Mate 60 that's just come out, which is just like basically taken a dramatic step forward in terms of connectivity in China. And it's not only the faster specs. I mean, it sold out in like two days right away. But it's not only the faster specs that people are interested in, it's this matter of national pride. In the U.S. banned Huawei from using the Android operating system.

And that effectively, between that and the restrictions on connectivity, the adoption within China, I think, tanked. And the iPhone was the beneficiary of that. Now, with this faster phone, the thought is that Huawei can start to make up some of that market share. And with a product that has somewhat close to parity to the iPhone in China, the thing that this is a thing that surprised me is that it's now becoming a matter of national pride in China where people are like, I am a, I believe in the government, I believe in our country. I'm a Huawei user.

And what this government thing signals is that, you know, if you are a true supporter of the Chinese Communist Party, you're not touching that iPhone. You're going to get this Huawei mate 60 and roll with that. And when it becomes this, this sort of a movement phone versus a specs phone, that's where you could end up seeing the iPhone really lose some share there. I think that's 100% true. It's just there's different elements of it.

The, A, you could already have that sense of pride, right? That may already exist. B, the government can impact it through how they communicate with the citizenry there, right? And the third thing is just outright impacting it, meaning like, again, talking about this, there's a word for it. I forget what it is, but there's need for balance. So let's say you had AT&T, T-Mobile, and let's say Sprint still existed. And they were a really weak third competitor. And the government said to the other two guys, you cannot sign up new customers for the next six months because we want Sprint to be able to sign up new customers. Those are the types of

actions that have been taken historically in that country in order to restore balance, in this case, to the number of subscribers, you know, for an existing operator. So when I see that, historically have happened, then I think that they can take even more formal steps to help in this case what you would, you know, we call this the, in operator of land, we call this the national champion. Let's say Huawei is the national champion to help the national champion, you know, really just restrict and go to the operators and say, which are government owned and say, just don't sell the iPhone or maybe subsidize Huawei and don't subsidize iPhones, where it's not like an outright ban of like they can't, you know, import them. or keep them in the country, but obviously influence, influence those numbers. So certainly, again, that's clearly a risk. So briefly, what's your prediction of where this goes from here? I mean, again, this is like trying to put on politics hats, and I just think, like, this risk always existed, right?

This is, let's get back to the root of why we have a cell rating. I mean, if you look at the multiple of it, multiples there should be a function of growth in risk, and you have no growth, right, already. And now you have, and let's say the expectation for growth overall for the company is low single digits for next year. And then this is a risk of it. So this is the risk, as risk gets dialed up, meaning that this could lead to less phone sales, you know, you should pay a lower multiple, period. So if, so the way you would theoretically approach something like this, you'd say, okay, there's a 10% probability that there's, you know, you know, handsets are down a million. know, in this quarter and then it gets resolved. There's a 20% chance that something more

dramatic happens. And then you, you're effectively waiting the risk of those different scenarios in order to come up with a average earnings number. And then you put a multiple on it. So when I look at this all together, we've already done that. And this is why my revenue estimate is $17 billion below consensus for next year. Our earnings are below consensus. And ultimately if, whether this is something that impacts revenue, some of the regulatory risks in terms of what they're charging in their app store or some of the restrictions that they'll have on search, you know, all these things come to play in terms of what numbers the company is going to generate. Walt Pysick is here. He is a partner at Lightshed Partners and a GP at Lightshed Ventures.

We're talking a lot about the policy side in the first half. In the second half, we're going to talk a little bit more about Apple's business. Walt is actually the most bearish analyst on Apple in the entire analyst community. So kind of interesting to dig into that a little bit more. And then we'll also preview the iPhone 15 and maybe touch on one or two more topics before we head out. Back right after this. Hey everyone. Let me tell you about the Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than 2 million professionals read The Hustle's daily email for its irreverent and informative takes on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them.

So, search for The Hustle Daily Show and your favorite podcast app, like the one you're using right now. And we're back on Big Technology Podcast with Walt Pysik. Are you proud of the label, the most bearish analyst on Apple and on Apple? in Wall Street? I'm really not, and I mean, I've covered this thing for, I don't know, 15, 16 years, and I've had a buy rating on it more than a sell rating. So I'm not like, I know there's some people that kind of dig in their heels on certain companies.

I certainly was that way with Sprint before it got bought by T-Mobile. But in this case, like, you know, it's nothing against the company, the management team, the products. It's just, look, we just look at, we do what the, we, we, we, we, we, I'm very model-focused. And what the numbers tell us is the consensus is too high and the valuation is too high. And our input on this, unlike many of my peers, is from the operators, which is the demand side. And they're telling us what's happening.

And I'm seeing it in the reported numbers what's happening with the replacement cycle, meaning how long people hold onto their phones. And I had this very similar situation back in I think it was 2012 where we had downgraded the stock. In that case, it was from just a buy to a neutral. We hadn't gone to sell at that time. And early on, you know, the stock didn't work out. And I was on, you know, on CNBC.

You have egg on your face, blah, blah, blah. And then the misses started happening. And the stock was impacted. So, look, I don't know if I'm going to be right or wrong, but I just look at the numbers driven. And by the way, our peers do a great job and they do something I don't do, which is they go to Asia and they figure out what the supply is. The risk on that, though, is, you know, I can think of certain analysts. They come out and they say, oh, Asia's telling us that they're going to make this number of phones. And then two weeks later, they get revised down because Apple goes to them and says, yeah, you know, we're not selling as many phones.

So we're reducing the production. So that's a supply-based, supply-side-based analysis. And ours is more focused on the demand side. Just go ahead. Sorry. You brought up two things that I want to touch on. And then we can get back to this. But the first is valuation, right?

And the second is the upgrade cycle. So first valuation, okay, I look at it pretty simply, which is that I see the numbers, right? Apple's up 40% this year. It hit all-time highs above $3 trillion and stayed there for a while, even as its revenue contracted for three straight quarters and it looks like it's going to do that again this quarter. I mean, how does a company end up having such a high valuation, right? So it's not just the number, but it's multiple, right, which is like the forward-looking price to earnings ratio was above 30, which is just not, has never had that in its history before. And again, if its

revenue is going down, sales are going down, for it to soar in this way just seems completely counterintuitive. So let's touch on that first and then get to this slowing upgrade cycle. What do you think? Sure. First of all, I don't believe in the, that the market is efficient every single day. Right. Over time, the market is efficient in terms of growth and valuation. So Sometimes, you know, you just have more buyers than sellers. People are buying for defensive reasons. There's, you know, shifts into certain types of companies. Maybe there's a hope for growth.

I mean, earnings estimates have come down. So, you know, these things happen from time to time. And look, maybe I'm going to be wrong. And they're going to outperform even consensus. And the stock is reflecting better growth in 2024, which the upcoming quarters, excuse me, will determine that. But, you know, it just kind of is what it is until it isn't, right? Everyone's like, oh, it doesn't go down. By the way, there was also a time when there was a lot of discussion of, hey, this thing

should be valued like a SaaS or like a services company like Netflix, which I also found amusing because Netflix's PE multiple was actually lower than Apple's. And let's just focus on that for one second. Netflix spent two decades building what they have today in terms of investing in content, investing in technology, which is massive, investing in customer acquisition. And they're undoubtedly the biggest in this one segment of what Apple does. And they're a $30 billion company, right? Apple's in 80, Apple services business alone is $80 billion. And by the way, it's growing, it grew less than 10% in the last three quarter.

So it's not like you're getting hyper growth in this segment. So to say like, let's take a, you know, a business that's 20% of your total, growing at 10%. So you're adding, what, two percentage points of growth and you're going to re-rate the entire company to say this is a service business? A, that's, I think, faulty logic.

And B, even if you did that, you're not even getting a higher multiple because the multiple's already as high as some of these other recurring revenue businesses like Netflix. Exactly. I mean, 52% of the revenue is still from iPhone. So, yeah.

And by the way, like iPhone 100%, is a recurring revenue business in the sense that those customers come back to you, right? So I get that like there's, you know, where Apple is today in terms of their customer loyalty, you know, you can argue that that's a very,

you know, a predictable business. But the point is, it's not growing. And then you've got two other segments that are effectively in decline. So, you know, what is that, what do you end up with? You end up with no growth. Is the rest of the, yeah,

Is the rest of the economy at risk a little bit because we have, sorry, the rest of the market at risk a little bit because so much of the, it seems like Apple's just kind of been pulling it up year after year. And it just, I mentioned the first half, but it makes up so much. Like if you're in a passive investor, you hold ETFs, like you have like the S&P 500 or NASDAQ funds. Like you're, you're seven to 10 or even more percent of your portfolio is just going to be Apple. So, I mean, your prediction is that this stock is going to fall dramatically. What does that say for the rest of the market? I mean, look, we all own index funds and mutual funds.

So it's probably one of my biggest personal holdings, not because I own it personally. I don't. Just because it's within an index fund. But it's not a call on the market. And frankly, last quarter when the stock sold off after they reported, the market was up. And I think a lot of times, you know, leadership, you know, meaning the top five or ten stocks in the market are always the primary driver or frequently the primary driver. And sometimes those things change. So maybe if Apple has a drawdown, which it has had in the past, maybe not

when it's waiting was as great, then maybe one of the other large cap tech names like Amazon or Facebook is going to do that much better in terms of how the overall markets can perform and money will just shift there. Yeah. So I mean, I think just things change. Like, you know, know leadership has always been been big and there's been different leaders 10 or 20 years ago that no one thought would ever fall off and and they did okay and so let's talk and by the way just just to be clear our call is not that like this is the end of Apple Apple is doomed all I'm saying is it's gonna be a pretty expensive I mean it's still a very valuable company even if it hits your it's a it's a great company right it's but there's but where should it be valued and where

should consensus be? So like maybe that when they miss and the stock comes down and our numbers are in line with consensus, maybe our numbers are going to be better than consensus, and then it can return to decent performance. Maybe all of this R&D that they've been investing in over the years. I mean, just look at that R&D number. I think it's like 30 billion a year now, continues to grow as a percentage of revenue. Maybe that will deliver some innovative products. I know there's always been this speculation about cars and TVs and now you actually have a product that they're going to launch in the first quarter with the VR, the ARVR. Yeah, the vision. So maybe one of these things, you know, will, you know, return a great company. I just don't think that this is the

right price to invest in it. And so let's pick up on one last thing, which is before we move to iPhone 15, which is the upgrades, right? So you say you speak to the operators, right? So these are the companies that know who's upgrading, how often this happens. I mean, they're like, if you're going to look for someone to know this, you know, almost as well as Apple does, it's then. And the sense that I get from hearing you speak about it is that people are just holding onto their phones for years and years and years longer than they ever have. Is that sort of what you're seeing? And I mean, this sort of like the segues naturally into what's going to happen with the iPhone 15. But just from the operator's side, is that what you're hearing from? And it's not, this is not just a private

conversation with me. This is they go on earnings calls. They, they were just interviewed by, you know, C&BC and spoke at the Goldman Sachs conference. I mean, they have a good idea of what's going on. In the U.S., let's just look at the U.S., every market's different, and I cover, you know, operators throughout the world. But in the U.S., they actually, 80% of their sales actually go through their own distribution channels, and then they can put their finger on the scale one way or another in terms of subsidies and, you know, the payment plans and how those things work.

And, you know, whether it's America Mobile, which is emerging markets in Latin America, or the developed markets, the story is the same, which is people are holding onto their existing phones longer. And we can sit here a debate and make negative comments about the evolution of the products, and it's not revolutionary, but the facts are what they are. And the outlook from these operators, which, again, have a good sense of how things are progressing, or that that replacement cycle is going to continue to lengthen, which is going to make it very hard to grow. So if you look at last quarter, it could have been worse. they did have some growth from, I think, India and a couple other emerging markets, which was surprising.

Then the question is, like, well, how sustainable, yes, huge populations, but in terms of GDP, like number of people that can afford an $800,000 phone versus maybe some of the older models. And then when they purchase those phones, how much services revenue accretes? How many applications is someone going to buy in a market where the GDP is so low? And just one other point on that, what many people don't know is that services line that everyone gets so excited about includes an allocation of revenue from equipment, meaning that you spend $1,000 on an iPhone. I don't know what the exact number is. Maybe it's $100 or $200.

They actually allocate into the services line. No way. I had no idea that was the case. That's wild. Why? Because they say, well, the accountants tell them, because you're getting free services like message and maps, and these are. services, so that needs to be booked in the service line. So there is, in one portion of the

revenue, some correlation to the actual number of phones that are sold. Aside from, if your mix is going to go to emerging markets, like how many people are going to be doing paid subscriptions in those markets? Okay. Before we end, what's your feeling on the iPhone 15? I mean, I have no idea. I think my friends are all upset about the new cord and no one wants to pay. Really? I'm personally excited about that new cord. It's like finally some standards in my laptop as USBC. Everything I'm plugging in is USBC. The fact that my iPhone is a lightning cable is driving me nuts.

I didn't upgrade to the 14 just so I could get the 15. But maybe that I'm an outlier. You think I'm weird because of that. I don't know, no. You're with my kid. He's like, yeah, he's psyched about it. I think people that upgrade frequently, like Rich Greenfield, my partner is very excited about it because he's got all the newest phones.

But for those of us that have two or three-year-old phones, we're still plugging into bricks that have the old USB connection. So, I mean, who knows? At the end of the day, like, we'll see if it's evolutionary. I mean, there's people out there that constantly say this is the super cycle, super. And like, look, there's one, there's been one super cycle. Super cycle. It's when the phone got bigger in the 6S, right?

I mean, in the 6. So it wasn't COVID? It was just sizing. I mean, COVID, you had, you know, you had good growth, but not like the growth you had with the true super cycle. Yeah. And certainly 5G is not. deliver that either. Are you going to stick with whatever you have or you think you'll make the move?

I have an iPhone 12 and my issue is not only bad, well, it is battery. It's just the thing when it gets heated up at all, the phone just turns off. The phone just turns off. So I may actually be due for an upgrade. I'm on a 10. I plug it into a car. I worry. You're in a 10? Yeah. I mean, I really underscore the thesis then. So the question though is, are you going to buy the new one or are you going to buy last year's model at the lower price. I'm waiting for the 15. I've been waiting. I would have been on the 14.

This phone is really, it's true garbage. I've said it on shows in the past. Screen's cracked. Bright line through it. I've replaced the battery, but plug it into a car and, you know,

both the car and the phone overheat. It's like one of those like mutually destructive things. So yeah, I'm waiting. I'm excited for that 15. Well, there's a little envelope and I think I was, who did I read? I think, I think it's New York Times or Wall Street Journal, Julia Stern, I think her name is,

that she talked about the packet you can get to slide your phone in to keep it cool to save the battery. So there's our tip for listeners to preserve the battery life. My wife and I, we did a big road trip through the Pacific Northwest over the summer. And we would drive for about 30 to 45 minutes and then stick the phone in the air conditioner and then be able to turn Google Maps back on. Okay, before we go, are you able to chime in for like, one or two minutes just about the charter situation because we talked a little bit last week about the problems that Disney's having in its business and we said what's going to happen

with ESPN and now like just as that happened charter and ESPN entered this big dispute I know we're about towards the end of our time but if you could just give a quick summary about the state of play there I think what's amazing is what I've been learning is the number of people that are actually you know consume sports on a regular basis that are super fans It's probably like a lot lower than what many of us believe, and the costs for these rights continue to go up. I mean, obviously, DirecTV has their own battle or surrounding sports. I'm sure DISH will have some as well.

So it's getting harder to substantiate for everyone to subsidize the sports fanatic like myself. And I think the numbers have gotten to that point and the technology in terms of what YouTube TV offers as an alternative. And the broadband penetration in terms of, like, what you can do. All of these things have now coalesced at a time where, you know, I think Disney is going to be facing some very difficult decisions and how they handle that with Charter. And look, the challenge here is, I think the way it works is whatever they, whatever they agree to with Charter,

I think is probably going to then accrue to other large distributors just based on most favorite nation clause. Don't know that for a fact, but, I mean, you would think that, you know, as rights come up or maybe even sooner, that those, whatever the new deal is that they cut with Charter is going to have a broader impact. But it's a fascinating time. I think things are kind of unraveling quickly in that whole ecosystem. And the fundamental dispute is ESPN is like we've acquired all these rights to air lead games, pay us this amount to carry the network and Charter is just like, you're done, you're done. we have paid this amount for all of your subs when only whatever it is let's you know some low much very low amount are actually using it so if they just do the math like if those customers churn and they lose X billion but then they drop two billion of what they're paying to Disney like it's just math I mean I think the the one factor that's harder to calculate is like the brand impact meaning that when I disconnect my when I rip out all my set top boxes and I'm going to put YouTube TV in at the same time, do I take my cable modem and throw it out? And do I have a fiber alternative? Or maybe I turn

to T-Mobile or Verizon or now AT&T that's selling these services. Like, is there a brand impact that hits the core of what Charter's business is, which is that broadband business? And that that's a debatable topic. We're going to have to see how that impacts the company over time. Yeah, well, this is definitely something that we're going to keep following and really should go into a bit more depth here on the show. Well, thanks so much for joining. Great speaking with you. and really appreciate the very insightful and elucidating analysis on the Apple stuff and Charter. You bet. All right.

Thanks, everybody for listening. We'll be back on Wednesday. We have a great author with a new book that takes you inside Amazon. So stay tuned for that. And then plenty of great interviews coming up this month. Back in action, we have some great stuff, including a very big CEO who I'm very excited to reveal. Maybe next week I'll let you know. All right.

Thanks again for listening. And we'll see you next time on Big Technology Podcast. Thank you.