This Week in Tech: Apple, Tesla, Yahoo, and More

Given the accelerating rate of change in technology, there is rarely a dull moment in the tech sector and this week was no exception. In this article, we will take a look at the most relevant news concerning some of the giants in the industry such as Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOG), Tesla Motors Inc (NASDAQ:TSLA), Yahoo! Inc. (NASDAQ:YHOO), and AT&T Inc. (NYSE:T). We will also use 13F data to see how elite funds are positioned in each of these stocks.

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Tesla Motors Runs Into Some Negative Rumors

Tesla Motors Inc (NASDAQ:TSLA) ran into some turbulence after Bloomberg reported this week that the U.S. National Highway Traffic Safety Administration is examining a potential suspension issue in Tesla’s Model S vehicles. The article said that the agency is asking for additional information from Tesla and from Model S owners. Tesla promptly responded that the article might not be true, saying that “there is no safety defect with the suspensions in either the Model S or Model X,” and that the “NHTSA has not opened any investigation nor has it even started a “preliminary evaluation,” which is the lowest form of formal investigatory work that it does.” Tesla also hinted that shorts may have something to do with the rumors, citing the billions of dollars being bet against the company.

Tesla Motors Inc (NASDAQ:TSLA) has adjusted its policies after the report, however, by revising its nondisclosure agreement with customers to allow them to report suspected safety issues to the relevant agencies. Tesla is no stranger to controversy and has a very ambitious goal of producing 500,000 vehicles per year by 2018, two years earlier than its previous target. For the company to achieve its aims, it will need to win the PR war against the naysayers to ensure demand for its electric vehicles remains strong. 39 top funds in our system owned shares of Tesla at the end of March.

Yahoo! Catches a Bid

Yahoo! Inc. (NASDAQ:YHOO)‘s core properties caught a healthy bid this week after Bloomberg reported that AT&T Inc. (NYSE:T) along with Dan Gilbert, the owner of the Cleveland Cavaliers, each bid around $5 billion for Yahoo’s core business, real estate, and patents. That’s higher than what some bears estimated last week. A third bidder, Verizon Communications Inc. (NYSE:VZ), has offered between $3.50 billion and $4.00 billion solely for Yahoo’s core business. The sale of Yahoo’s core properties could help narrow the gap between the company’s stock price and its intrinsic value as a holding company. 97 top funds in our database owned shares of Yahoo! Inc. (NASDAQ:YHOO) on March 31, while 51 were long AT&T Inc. (NYSE:T).

On the next page we’ll check in on the battle between Apple and Alphabet last week, and show the weekly performance of all five companies featured in this article.

The Battle For Developers Heats Up

Given that iPhone sales have leveled off due to the strong dollar and weak macro-economic climate, Apple Inc. (NASDAQ:AAPL) is adjusting its app store to realize more growth. According to the Verge, iOS developers who maintain a subscription with their customers for longer than a year will have Apple’s share of the subscription fees halved to 15%. Apple will also allow all developers to offer subscriptions rather than just a certain subset, as before. The subscription price cuts could win Apple more loyalty from developers and strengthen the iOS ecosystem. The more quality apps and services Apple offers, the more likely consumers are to buy its high-margin iPhones.

Not to be outdone, Alphabet Inc (NASDAQ:GOOG)‘s Google subsidiary said it too will cut subscription fees in half, to 15%. Given that Alphabet makes most of its profits elsewhere, the company is offering more generous terms by cutting the price of subscriptions down to 15% at the onset, rather than after one year. Although the price cuts will hurt Apple and Alphabet’s short-term subscription software revenue, the two companies could end up ahead in the long run if more compelling subscription services pop up. The two tech giants are also big enough for the negative financial results from the price cuts to not matter much in terms of their overall earnings. Of the 766 funds in our database, 152 owned shares of Apple Inc. (NASDAQ:AAPL) at the end of the first quarter, while 223 were long Alphabet Inc (NASDAQ:GOOG), which included 155 shareholders of its class A shares and 142 shareholders of its class C shares (74 firms owned both classes of the company’s shares).

Weekly Stock Performance

Disclosure: None