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Telecom Stock Roundup: Qualcomm Guides Up, Verizon Plans Online TV Streaming

Is (TDS) Outperforming Other Utilities Stocks This Year?

Although most of the major telecom stocks lost value last week, the sector was witness to a number of important events. Notable among the many developments is mobile chipset giant Qualcomm Inc. QCOM coming up with a better-than expected outlook for revenues and profit margins for 2019. Adjusted profit per share is estimated in the range of $6.75-$7.50. Revenues are forecast in the range of $35-$37 billion.

Qualcomm plans to achieve the profit target through its new $1-billion cost reduction plan, gains from the NXP Semiconductors NV NXPI deal and by resolving current licensing disputes, especially with Apple Inc. AAPL. Excluding royalty revenues and certain product revenues from Apple and other licensing disputes, Qualcomm expects to earn $5.25 in 2019.

Verizon Communications Inc. VZ is reportedly planning to launch a theme-based online streaming TV service in 2018. The U.S. telecom behemoth will offer channels based on themes like news, sports and entertainment. All these channels will be offered as a standalone application. The content is likely to come from Oath properties like TechCrunch, Engadget, Huffington Post and premium content from third-party sources.

Also, AT&T Inc. T recently finalized a year-long pending deal with the Communications Workers of America (CWA) related to AT&T Mobility Orange unit employees. Announced on Dec 13, 2017, the four-year contract covers more than 20,000 AT&T Mobility employees (in wireless retail, call center and tech segments) in 36 states and the District of Columbia. The deal also includes wage hikes, healthcare benefits, employment security for call center and retail sales employees, and retirement benefits comprising pension and savings plan.

Leading wireless tower operator Crown Castle International Corp. CCI is reportedly planning to unite its fiber operations/assets under the Lightower brand. The merged entity is likely to form a well-established brand and network. It will revamp Crown Castle’s position as one of the largest fiber network operators in the nation. The company has been continuously trying to reposition itself from a tower operator to a fiber provider (focused on the small cell opportunity), through the purchase of several fiber operators.

In a separate development, Comcast Corp. CMCSA, the biggest cable multi-service operator (MSO) in the U.S., is reportedly being slapped with patent infringement charges by TiVo Corporation TIVO in relation to its X1 platform. The suit claims that Comcast’s X1 set-top boxes are infringing on at least eight of the patents, which are held by Rovi Corp. Notably, TiVo was acquired by Rovi in 2016 and the merged entity is known as TiVo, which attained ownership of more than 6,000 patents.

Outside the United States, Nokia Corp. NOK entered into a five-year deal with Optus to manage its mobile network infrastructure, operations and field maintenance. Nokia will provide network operations and software services to help the Australian telecom operator scale its network, which includes deploying robotics, artificial intelligence and extreme automation. The two companies will also work together to develop a network operations centre. Nokia carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Read the last Telecom Stock Roundup for Jan 11, 2018.

Recap of the Week’s Most Important Stories 

1.    Qualcomm claims to have saved around $1.4 billion through its previous cost-cutting plan announced in July 2015. Moreover, the company is planning to organize a new $1-billion cost-reduction plan. The company aims to reduce expenses in four main areas that includes selling, general and administrative expenses (SG&A). The company is also hopeful about some of its 5G technology investments which will strategically lower spending in research and development. (Read more: Can Qualcomm Sustain Last Day's Stock Price Surge?)

2.    Verizon inked a five-year digital streaming deal with National Football League (NFL). The telco paid approximately $2.25 billion to stream NFL’s content on its digital and mobile media platforms. Additionally, Verizon signed an extended carriage deal with A+E Networks, to broadcast the latter’s programming in its digital media suite. Also, games like National Women’s Soccer League will be streamed on Yahoo Sports and Go90 platforms. (Read more: Will Verizon Gain From Theme-Based TV Streaming Service?)

3.      This is not the first time that AT&T is trying to resolve issues with CWA. With the new agreement, AT&T has reached 32 different labor agreements since 2015 covering about 165,000 employees. This, in turn, is expected to help the service provider strengthen relationship with the union and encourage employees to continue working with the company. Notably, the latest contract follows after 11 months of negotiations and public disputes between the company and workers. (Read more: AT&T Finalizes Deal With Communications Workers of America)

4.    Considering the current market scenario, Crown Castle is pursuing small cell deployments for wireless customers. The company is undertaking this measure to enhance its networks and meet robust demand for high-speed, high-capacity wireless services. Using small cells in unlicensed 3.5 GHz band will significantly reduce cost of operations for wireless operators. The 3.5 GHz radio frequency is being considered in many parts of the world for the upcoming 5G wireless standard. (Read more: Crown Castle to Unite Fiber Assets Under Lightower)
 
5.    The patents that TiVo is using to accuse Comcast include features like pausing and resuming programs on multiple devices, DVR recording and additional advanced DVR features, advanced search and voice functionality, and restarting live shows, among others. Two cases were filed by the company, one in a California federal court and another in Massachusetts. (Read more: Comcast Slapped With Patent Infringement Charges by TiVo)

Price Performance

The following table shows the price movement of the major telecom stocks both in the last week and the last six months.

Company

Last Week

Last 6 Months

VZ

-1.43%

18.46%

T

-3.40%

1.26%

TMUS

-1.30%

3.88%

S

-5.34%

34.56%

TEF

0.20%

-6.69%

AMX

-0.86%

3.59%

CMCSA

1.56%

6.33%

CHTR

1.98%

4.54%

DISH

-7.66%

-31.00%

In the last five trading sessions, share price movement of most of the major telecom stocks witnessed a negative trend. DISH, Sprint and AT&T lost significantly in the same time frame. On the other hand, price performances of most of the major telecom stocks were predominantly positive in the last six months. However, Sprint and DISH Network suffered major reverses in the stock price, although Verizon gained attractively in the same time period.

What’s Next in the Telecom Space?

We expect heightened activities in the telecom industry over the next week as big names like Verizon, Comcast, Crown Castle and Rogers Communications will release their fourth-quarter 2017 financial results. The market will closely evaluate these quarterly results in a bid to assess industry dynamics and future growth prospects.

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Crown Castle International Corporation (CCI) : Free Stock Analysis Report
 
Nokia Corporation (NOK) : Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
AT&T Inc. (T) : Free Stock Analysis Report
 
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Comcast Corporation (CMCSA) : Free Stock Analysis Report
 
TiVo Corporation (TIVO) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
NXP Semiconductors N.V. (NXPI) : Free Stock Analysis Report
 
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