Key Points:

• Alphabet Breakup: The U.S. government may force Alphabet to split, with advertising and Android as key assets.
• Android’s Potential: Android could be more valuable if monetized separately.
• Shareholder Gains: A breakup might benefit Alphabet shareholders, similar to AT&T’s split in the 1980s.
• Also: The smart money is already looking at The Next Nvidia as the best investment today

Watch the Video

Edited Video Transcript:

[00:00:00] Douglas A. McIntyre: Uh, so the government says, well, we’d like to break up Alphabet. They’d like to break up everybody. They want to break up Amazon. So let’s be the investment bankers who get the call from the government. They’ve only got one business on paper that has any money in it. And that is, is advertising. Google, you’ve got Google’s own ads.

[00:00:21] Douglas A. McIntyre: You’ve got the, the, how they power a lot of other sites with ads. You’ve got YouTube. That’s almost everything. Yeah. They do have though an asset, which is ludicrously valuable. Uh, and that is the Android operating system. Now that doesn’t mean that they’ve monetized it the way they might do. But if, if you came to me and said, Doug, you’re the investment banker at Goldman Sachs, we’re going to hire you.

[00:00:46] Douglas A. McIntyre: What I would do is I would say, okay. We may take bits and pieces of the company, but what we’re going to do is that’s how we’re going to split it up.

[00:00:57] Lee Jackson: I, you know, it’s interesting because there is half of the world that will tell you that Android is, is much better than the iOS system. You know, and a lot of people I know it will swear by it and they will not change.

[00:01:12] Lee Jackson: And you would think that they would want to monetize that in some way, shape or form. And it’s going to be interesting to see what happens because, you know, first they lost the ruling, then a judge said, well, You know, let me tap the brakes on the big assessment and we’ll get back to it. So I think ultimately, not only does the U S government want to strip them apart, but as we’ve discussed ad nauseum, so does the EU.

[00:01:38] Douglas A. McIntyre: Well, the advantage I think to Android is, is that it’s like iOS. It’s got a lot of this Google products sort of embedded in it. Well, yeah, sure. Of course it’s a distribution system. Um, But if you look at the other things, Waymo, the automatic self driving, nobody cares about that. It’s not worth at least not yet.

[00:01:56] Douglas A. McIntyre: Yeah. Google’s, uh, Chrome, the browser, maybe that’s worth something, but I will make a prediction before we go here. And that prediction is, is that. If Alphabet’s forced to break up, the operating system is going to be the second big piece after advertising.

[00:02:16] Lee Jackson: Yeah. And, and also because what we’ve seen on Google search, I mean, they, they, they censor stuff they don’t like.

[00:02:23] Lee Jackson: Okay. I mean, that’s not my opinion. It’s been proven that they censor stuff they don’t like. And what if somebody, and I think Musk could consider doing this, what if somebody comes up with something to challenge? Chrome and, and Google, you know, the email and, and all of that part of it. What if somebody challenges that and says, uh, we will give you good or better than Chrome and good or better than Gmail.

[00:02:51] Lee Jackson: And when you do search, we won’t censor it. I mean, I think that. Is, is something that they’re going to have to be very cognizant of in the not too distant future because I hear Musk is floating that already of developing that. Well,

[00:03:06] Douglas A. McIntyre: this is, this is what I’ll close with on, on this subject. Uh, if you’re an Apple, I’m sorry, if you’re an Alphabet shareholder, go back into the eighties, this happened at AT& T, they broke it into a bunch of regional phones because of a monopoly.

[00:03:24] Douglas A. McIntyre: If you held your AT& T shares. After the breakup and added the value of all those stocks together a year out, you did better off. I mean, you, you, you, you, you did phenomenally well. So you did,

[00:03:38] Lee Jackson: yeah, you did really well, especially if you own some of the bigger pieces like, uh, you know, Bell South and, and, you know, the ones that were in high growth areas.

[00:03:50] Douglas A. McIntyre: All right. Well, listen, I will talk to you later and take care of yourself. All right. Thanks a lot, Doug. Bye bye.

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