NuCable: “Company That’s About to Kill Cable Television”

Which company with a "Secret Silicon Valley Tunnel" is being teased by Dave Baumann for the Oxford Club?

Today’s teaser pitch is not new — I first saw this ad in April, 2014… and it’s been running off and on ever since, but we’ve gotten a lot of questions about it this week so we’re re-running it for you today. And I’ve left the comments from the original article at the end so you can see what your fellow readers were saying at the time.

What has changed since April of last year? Well, your top-secret “NuCable” company has indeed launched a somewhat more flexible cable subscription package this year — though that also got them sued by Disney’s ESPN, round one of a fight that will probably go on for quite some time… and despite that “revolutionary” move to kill cable television, the shares have not risen dramatically to “$100 to $150 to $185” as the ad teased back then (and continues to tease now), the stock is almost exactly where it was when this ad campaign started, just below $50.

Of course, it has also paid out $2.75 or so in dividends during that time, which is why most investors own the stock. Nothing to sneeze at.

Otherwise? Well, not much has changed — though your secret “NuCable” company (OK, fine, yes it’s Verizon — sorry to spoil the surprise) has actually been cutting back their investment in their fiber optic FiOS network of late because of its high cost, pricing has gotten a bit more competitive on the wireless side with T-Mobile and Sprint fighting for position, and their largest real competitor, AT&T, is still fighting to win regulatory approval for its acquisition of DirecTV.

I still own the shares, I’d argue that Verizon (sorry, “NuCable”) hasn’t fundamentally changed very much and is still trading largely like a utility, and with that I’ll leave you with the words we first shared in April of last year when the ad started running…

—from 4/10/14, not edited or revised–

“Ford Killed the Horse & Buggy.

“Microsoft Killed the Typewriter.

“Apple Killed the Compact Disc.

“Now Introducing… The Company That’s About to Kill Cable Television.”

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That’s the intro to the latest ad from the Oxford Club… which thinks this secret company “NuCable” will be able to revolutionize the cable TV business and make all of our lives better (and, of course, make us rich). The spiel is much like growth stock pitches of the past, with intimations that if only you could have foreseen the market upheaval brought by Ford, Microsoft and Apple you would be rich … and now you have the chance to get in early on the next upheaval.

This is not all that different from the argument the Motley Fool has been making in their ads about “Television 2.0” for a year and a half, but this time the ad is from the Oxford Club, and this time they’re touting not the content owners (the Fool was teasing Disney, Scripps Networks Interactive, and Discovery) but an “upstart” competitor that’s going to be a better distributor than your cable company.

This is the crux of the argument:

“In what could be just a few months, a deep-pocketed and highly respected tech company will unveil a secret project that will soon become known as the “iTunes of the television industry.”

“I like to call it ‘NuCable.’ But keep in mind, virtually nobody knows about this yet.

“The products’ origins are somewhat shrouded in mystery…

“It was initially developed in a locked-down underground facility.

“(With no front door!)

“Only a handful of the project’s creators were allowed in through secure, underground tunnels.

“But for the vast number of people in America eternally frustrated with their cable companies, this secret project will be a godsend.”

And there’s plenty more — folks have been predicting an awesome next-generation television offering for more than a decade now, powered by the internet… and it’s sort of here, through services like Netflix and Apple TV and Hulu, but it’s not quite enough to overcome “real” TV. Here’s a bit more from the ad:

“Americans are ready for a cable alternative that really works. And in the coming months they’re finally going to get it.

“The Consumers Are Ready… The Media Is Buzzing… And ‘NuCable’ Is the Perfect Storm

“Over the last few months, details have finally started to emerge. And what I’m seeing is exactly what millions of cable customers have been crying out for.

“Keep in mind, there’s only a few media members privy to the technology behind what I’m calling ‘NuCable.’

“But they’re ALL buzzing with excitement…

Business Insider calls it a ‘Holy Grail for consumers.’

Forbes predicts, ‘It will kill the cable industry as we know it.’

“Reuters says the product goes beyond anything Apple or Netflix offers… Daily Finance is calling it a ‘game changer.'”

Any more clues for us? We do get a bit …

“This firm’s share prices have stayed comfortably in the mid-40s over the last year.

“But I can easily see it launching up to $100 to $150 to $185 once NuCable goes live… Even reaching Google levels of $1200, once millions of Americans make the switch.”

(And he includes a chart of this stock, with the name blacked out, going up from the high-$40s to $250 in 2014. Which is, frankly, ridiculous…. more on that in a minute.)

A few more clues for those of you playing along at home? Sure…

“The company behind NuCable is perhaps one of the most important tech firms in the country.

“They’re involved in virtually EVERYTHING that we take for granted.

“Cell phones… computers… tablets… and thousands of other gadgets we use every day. This company has their hand in nearly all of it.

“Again, this is NOT Apple or Google or Samsung that I’m talking about….

“Tens of millions of people are using this company’s products right now.

“Even if they weren’t on the verge of releasing one of the most transformative innovations in American history, they would still be a great investment.

“They handily beat their most recent earnings estimate. They have 3 years of steadily increasing revenue.

“They also pay a solid dividend. Analysts have referred to it as ‘one of the best dividend stocks.'”

That’s about all I can stand to excerpt for you — you can feel free to check out the original ad here if you want to double check my solution. But I do have the teaser solution for you… this is… our old favorite Verizon (VZ)

I know — it’s a letdown, right?

But there you have it.

Verizon may not be on all the top ten lists of most hated businesses in the country, but they’re probably pretty close — particularly if you’re asking folks whether they like paying $400 a month for their family’s phones. Those lists are generally populated with all the folks you have to pay every month, so competitor AT&T and all the cable companies and several electric utilities are usually on those lists (and no cable company has every gone broke because you hate them).

And Verizon is now the sole owner of Verizon Wireless, a gem of an asset with a valuable LTE network, as well as the owner of the still-fledgling FiOS network that’s competing with the cable companies for the “triple play” business (voice, broadband, TV) in many areas of the country.

I own Verizon shares because they were a stupidly easy buy when they carried a 6-7% dividend yield a few years back, but they’re still a fine stock to own for the gradually growing dividend… and I’d wager that the dividend is why most people are in the stock. Like other telecoms and utilities, it’s a pretty classic ‘blue chip’ kind of stock.

It’s also huge. Verizon is a $200 billion market cap company (a $300 billion company if you include debt), and it’s not growing particularly fast.

So why the big push? This spiel from Dave Baumann, the Oxford Club’s media analyst, is based on Verizon’s purchase earlier this year of OnCue, Intel’s “not quite ready for prime time” internet television business, which could indeed end up being a nice puzzle piece as they push to improve and extend FiOS.

But I’d guess that they’re probably not going to begin offering the US what it wants (a la carte cable subscriptions) in the next year or two — OnCue had some good deals with providers to do just that, but part of the reason they probably got decent content deals was that they were a small and experimental project. Big changes are certainly possible but, in truth, it’s pretty hard to see the Verizon behemoth being the company that shakes up and unbundles the at-home entertainment business, not after all of their years of aggressively bundling and tacking on services in much the same way that the cable companies do.

But sure, I guess it’s possible and I’d be delighted to see it — even if Verizon’s broadband doesn’t reach Gumshoe Mountain just yet (we’re still pretty much stuck with Comcast for TV and broadband in this corner of the world). But even if they do this, Verizon’ stock isn’t ever going to go up 10,000% like Apple after iTunes, or 1,000% like Netflix over their hot three year run a little while ago, regardless of the fact that the Oxford folks include those charts to get us excited.

So… Intel’s TV business that they sold to Verizon is not going to fundamentally change the way the company works overnight, but it might make Verizon’s FiOS better (this will apparently enable them to incorporate more IPTV into FiOS, providing more interactivity and on demand features than cable can by itself, and they’ve already been investing in improving their network and making FiOS work with Verizon’s wireless network to provide content across devices). And that’s a good thing.

OnCue also comes with some deals with content providers, though it’s up in the air how those deals will scale inside Verizon’s world. There was good coverage of the OnCue deal in Barron’s here (it only cost Verizon $200-300 million, almost a rounding error for both Intel and Verizon). Barron’s earlier very laudatory piece about the OnCue business, back when it looked like Intel was actually going to spend it into existence for consumers, is here if you want more description of the possibilities of the service and the technology.

Verizon is a good company, I think it’s pretty well and aggressively managed, and they have a huge customer base in an oligopoly. I own the stock and I won’t be selling it anytime soon unless something strange happens, but I’m counting on it as a consistent 5% yielder and I’ll be surprised if it ever beats the market in an up year.

And no, I don’t think Verizon is about to kill cable television — and I will be flabbergasted if Verizon’s stock price moves by triple digits (i.e., goes up 100% or more) in the next three years, let along 1,000%… but I suppose it would be reasonable for the stock to double in 5-10 years if they get a better hold on home entertainment, and I’m happy to see the dividend compound during that time.

They’re also, of course, not working in a vacuum — Comcast and all the cable companies are changing cable TV, too, and cable companies have great broadband pipes into a lot more homes than are served by Verizon FiOS.

So sure, buy Verizon if you like. But you’ll probably still end up hating either Verizon or your cable company in five years.

That’s about all I can tell you about Verizon’s secret “NuCable” business — think it’ll end up making us all rich? Looking forward to seeing the next generation of OnCue in your living room? Let us know what you’re thinking with a comment below.


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Eugene Rucker
Member
Eugene Rucker
April 20, 2014 1:30 pm

How can I purchase Stock in “NuCable”?

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Glenn
Guest
Glenn
June 18, 2015 12:16 pm
Reply to  Eugene Rucker

Eugene NuCable is provided by VZ

henrybirdwell
Member
henrybirdwell
April 20, 2014 3:05 pm

Travis,
What small oil driller is the PETROPLEX $8.00 DRILLER being teased ?????????
Henry

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359
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Venkat
Member
Venkat
May 9, 2014 2:07 am

I googled up the quote from Forbes, The article was talking about Intel’s IPTV project.

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190
ElectroPig Von Fökkengrüüven
Guest
August 2, 2014 6:49 pm

Crazy idea…if people had any sense at all, they’d get rid of cable TV, spend $200.00 or so, and put up an antenna. ONE TIME COST. Well, they tend to only last about 20-30 years…but if you figure on getting a new antenna every 10 years, that’s $20.00 a year, as opposed to what some people are paying every month.

But, hey…some people are “just too smart about money” to NOT waste it…

ruthrox
Member
November 18, 2014 11:42 pm

GOOGLE, may have something to do with NUCable. Could this be remnants or disused cable found underground in Kansas(?city) , now being extended and used closest to that
area?

Glenn
Guest
Glenn
June 17, 2015 4:34 pm
Reply to  ruthrox

Google bought a lot of what they call dark cable on the cheep as all it is was surplus unused cable. Google started competing in Kansas City but don’t know how that is working out.

Robert Koger
Guest
April 5, 2015 1:00 pm

I have been waiting for NuCable since I heard about it more than two years past. I go and look for what I can find. When I fist read about the gentlemen building this product it was to be ready for release in several months. Then nothing, then they were selling out to another computer that is screw up with the Comcast as well others that do not care about the public only them selves. So ever two or three months I look up NuCable and still nothing as they promised them. I have tried them all and Comcast is the worst for service, delivery, cost and they lie about what they tell you every month and just recentyl I stopped calling and this email ignited me once again as to a problem fixer. Keep me on your files.

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Lisette
Guest
July 8, 2015 9:34 pm

HOARD these stocks — 4th Industrial revolution is coming!! Graphene: CABN, LMRMF, CHGI

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gomango38
Member
July 9, 2015 1:50 pm

I had Direct TV and switched to VZ Fios. Not as good a picture, deplorable customer service. Would go back to Direct TV in a heartbeat if they offered internet. Recently had a Kafkaesque experience waiting on hold for over 3/4 hour only to learn that if I eliminated my phone service my bill would increase. Been with them for 5 years yet would suffer an early termination fee. They encourage you to mange your account online but that information is not available there. With respect to Peter Lynch’s philosophy, I’m not buying VZ and dumping the service when my contract expires. They are nefarious and I can find equally good investments without supporting companies that abuse me.

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b. gould
Irregular
b. gould
July 9, 2015 1:51 pm

Any info re Lite Access Technologies, LTCCF-(Pink sheets), LTE-TSE re fiber–optics direct-to-home. IPO June/15 @ .50 ; currently approx. 1.30?

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