Amazon Puts SpaceX, AT&T and Verizon on Notice

Before the earnings deluge occurs this week, let’s get caught up on some Portfolio news.

Amazon Targets Direct-to-Device Connectivity

Over the weekend, an application by Amazon (AMZN) to the FCC was revealed and it seeks the approval to launch up to 5,105 internet satellites as part of a constellation that will provide direct-to-device (D2D) connectivity. To ensure we are on the same page, D2D connectivity is defined as provide connectivity straight to smartphones or other devices via satellites in place of traditional cell towers.

In addition to services offered SpaceX’s (SPCX) Starlink, we’ve primarily seen this with Apple’s (AAPL) iPhone satellite connectivity, which allows compatible devices to connect directly to Globalstar (GSAT) satellites to text emergency services, send regular messages, share locations and request roadside assistance when completely off the grid without cellular or Wi-Fi coverage.

Remember, back in April, Amazon made a bid for Globalstar to bolster its low-earth orbit (LEO) satellite ambitions. At the time, it disclosed its intent to work with existing partners and additional ones to provide “ubiquitous global communications.” In that vein, we see the application with the FCC as laying the groundwork for that to happen under its rebranded Amazon LEO business. However, much has to happen for the company to launch a competing service, which it targets in 2028, including building its satellite network. As that happens, we’ll have a better sense of the competitive threat to existing wireless service providers like AT&T (T) and Verizon (VZ) as well as cellular tower companies such as American Tower (AMT) and Crown Castle (CCI).

In the near-term, that satellite effort along with its continued investment in AI and data center capacity for Amazon Web Services (AWS) means the Amazon’s comments about capex and cashflow will be of high interest when it reports after Thursday’s market close.

Apple’s Upgrade Program Begins

No, we are planning on upgrading Apple shares on Tuesday. Rather, the company is expected to unveil a new installment program named “Apple Upgrade” that will allow customer to finance purchases of certain iPhones, Macs, iPads or Apple Watches over either 24 or 36 months.

This new program replaces and expands the prior iPhone-only program. And that’s not the only replacement being made, Citizens Bank (CFG), which backed the iPhone-only program, is being replaced by Klarna (KLAR). What this means is Apple is expanding its relationship with Klarna. Previously, Apple Pay users were able to leverage Klarna to spread a purchase’s payments out using Klarna’s “Pay in 4 plan.”

Our take on this the new program will help Apple customers content with higher prices announced by Apple in recent weeks as well as the higher ones we’re likely to hear about for Apple’s newest iPhone models when it reveals them, most likely in late September. Here’s the thing: Klarna acts as the financial backer and credit provider for the new Apple program, while Klarna Group Plc funds the hardware purchases, handles customer enrollment checks and manages the multi-year payment structures.

In short, it appears that Apple is addressing the higher price tag question and doing so in a way that had modest impact on its business. Pretty smart, and it could help spark that long awaited iPhone upgrade cycle many across Wall Street, including us, have been waiting for. And that could be a catalyst for us to revisit our current Two rating on Apple shares.

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At the time of publication, TheStreet Pro was long AAPL and AMZN.