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Telecom Stock Roundup: Ericsson-Liberty Global Deal, AT&T's 5G Deployment & More
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In the past five trading days, the downtrend in telecom stocks continued due to the uncertainty regarding trade settlement with Canada and looming threats of tariff imposition on $200 billion worth of goods imported from China. To add to the woes, the U.S. trade deficit jumped the most in three years. It hit a five-month high in July and further hastened the decline.
After several rounds of negotiations between the United States and Canada to redraw the NAFTA deal by ironing out the trade-related disputes at the higher levels, both the parties failed to reach a consensus by the Friday deadline. As the talks ended in a stalemate, President Trump upped the ante by threatening to dump the tripartite trade agreement and script a bilateral trade deal with Mexico, forcing Canada to either mend its ways or accept the shift in trade dynamics.
To that end, Trump formally notified the Congress of his intentions to ink the new NAFTA deal with or without Canada within a 90-day period. Canada has voiced its dissent against the unrelenting pressure tactics of the United States and made it clear that it would not sign a deal unless it is beneficial for its citizens. Although both Canada and United States hope to reach a consensus by the deadline, concerns of the deal falling flat remain a serious threat.
Regarding company-specific news, strategic deals, technological collaborations and deployment of 5G technology took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Ericsson (ERIC - Free Report) announced that it has inked a deal with Liberty Global plc, the world's largest international TV and broadband company to help it consolidate its European fixed network services and thereby optimize operations.
Ericsson has undertaken definite steps to consolidate Liberty Global’s operations in six European countries, namely the U.K., Ireland, the Netherlands, Hungary, Poland and Germany. The new contract reinforces the existing business relationship that is centered on the Managed Services contract for mobile networks and fixed field services in Poland, Hungary and Austria. (Read more: Ericsson Aids Liberty Global to Optimize European Operations)
2. AT&T Inc. (T - Free Report) announced that as part of its 5G deployment in a dozen cities in 2018, Indianapolis would be its seventh 5G city, adding to the previously announced cities of Atlanta, Charlotte, Dallas, Oklahoma City, Raleigh and Waco.
The telco giant has been laying the foundation for 5G in Indianapolis for some time now as part of its investment strategy to bring the latest in connectivity to people across the country. More so, Indianapolis was a natural choice for the company as one of the 12 introductory 5G cities as it is one of the fastest growing tech hubs in the country and home to a variety of large and small businesses. (Read more: AT&T to Launch Mobile 5G Service in Indianapolis in 2018)
3. Verizon Communications Inc. (VZ - Free Report) has announced that it is upgrading its Cat M network by adding voice capabilities for Internet of Things (IoT) solutions.
The communication services provider had first launched Cat M network in March 2017 to provide scale, coverage and security to customers looking for wireless access solutions for IoT. With the introduction of voice features, its nationwide Cat M network is able to support a broad base of IoT solutions with enhancements. (Read more: Verizon Upgrades Cat M Network With Voice Capabilities)
Non-GAAP net income was $74.3 million or 48 cents per share compared with $56.4 million or 35 cents per share in the year-ago quarter. Notably, the bottom line beat the Zacks Consensus Estimate of 35 cents. Quarterly total revenues increased 12.4% year over year to $818.8 million, driven by continued growth in APAC (Asia Pacific) service providers and global webscale customers. The top line surpassed the Zacks Consensus Estimate of $791.72 million. (Read more: Ciena Q3 Earnings Beat Estimates, Revenues Up Y/Y)
5. Qualcomm Technologies International, Ltd, a subsidiary of QUALCOMM Incorporated (QCOM - Free Report) , introduced Qualcomm aptX Adaptive.
The next-generation audio codec, aptX Adaptive is designed to automatically adjust to the type of content consumed by consumers. This, in turn, helps in improving the audio quality apart from reducing latency in audio-visual content including videos and games. Combining superior audio quality, low-bit rate audio transmission and scalability, the innovative audio coding technology offers enhanced wireless listening experience for users in applications like mobile gaming, music and video. (Read more: QUALCOMM Unit Unveils aptX Adaptive to Boost User Experience)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the past six months.
In the past five trading days, Qualcomm was the major gainer with the share price increasing 2.4%. Juniper Networks, Inc. (JNPR - Free Report) was the major decliner with its stock losing 3%.
Over the past six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 14.6% while AT&T declined the most with its shares falling 15.3%.
Over the past six months, the Zacks Telecommunications Services industry has declined 2.9% while the benchmark S&P 500 Index has gained 6%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the outcome of trade-related talks with Canada and how the telecom sector braces itself for the impact of the trade war with China.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Telecom Stock Roundup: Ericsson-Liberty Global Deal, AT&T's 5G Deployment & More
In the past five trading days, the downtrend in telecom stocks continued due to the uncertainty regarding trade settlement with Canada and looming threats of tariff imposition on $200 billion worth of goods imported from China. To add to the woes, the U.S. trade deficit jumped the most in three years. It hit a five-month high in July and further hastened the decline.
After several rounds of negotiations between the United States and Canada to redraw the NAFTA deal by ironing out the trade-related disputes at the higher levels, both the parties failed to reach a consensus by the Friday deadline. As the talks ended in a stalemate, President Trump upped the ante by threatening to dump the tripartite trade agreement and script a bilateral trade deal with Mexico, forcing Canada to either mend its ways or accept the shift in trade dynamics.
To that end, Trump formally notified the Congress of his intentions to ink the new NAFTA deal with or without Canada within a 90-day period. Canada has voiced its dissent against the unrelenting pressure tactics of the United States and made it clear that it would not sign a deal unless it is beneficial for its citizens. Although both Canada and United States hope to reach a consensus by the deadline, concerns of the deal falling flat remain a serious threat.
Regarding company-specific news, strategic deals, technological collaborations and deployment of 5G technology took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Ericsson (ERIC - Free Report) announced that it has inked a deal with Liberty Global plc, the world's largest international TV and broadband company to help it consolidate its European fixed network services and thereby optimize operations.
Ericsson has undertaken definite steps to consolidate Liberty Global’s operations in six European countries, namely the U.K., Ireland, the Netherlands, Hungary, Poland and Germany. The new contract reinforces the existing business relationship that is centered on the Managed Services contract for mobile networks and fixed field services in Poland, Hungary and Austria. (Read more: Ericsson Aids Liberty Global to Optimize European Operations)
2. AT&T Inc. (T - Free Report) announced that as part of its 5G deployment in a dozen cities in 2018, Indianapolis would be its seventh 5G city, adding to the previously announced cities of Atlanta, Charlotte, Dallas, Oklahoma City, Raleigh and Waco.
The telco giant has been laying the foundation for 5G in Indianapolis for some time now as part of its investment strategy to bring the latest in connectivity to people across the country. More so, Indianapolis was a natural choice for the company as one of the 12 introductory 5G cities as it is one of the fastest growing tech hubs in the country and home to a variety of large and small businesses. (Read more: AT&T to Launch Mobile 5G Service in Indianapolis in 2018)
3. Verizon Communications Inc. (VZ - Free Report) has announced that it is upgrading its Cat M network by adding voice capabilities for Internet of Things (IoT) solutions.
The communication services provider had first launched Cat M network in March 2017 to provide scale, coverage and security to customers looking for wireless access solutions for IoT. With the introduction of voice features, its nationwide Cat M network is able to support a broad base of IoT solutions with enhancements. (Read more: Verizon Upgrades Cat M Network With Voice Capabilities)
4. Ciena Corporation (CIEN - Free Report) reported better-than-expected results in third-quarter fiscal 2018 (ended Jul 31, 2018).
Non-GAAP net income was $74.3 million or 48 cents per share compared with $56.4 million or 35 cents per share in the year-ago quarter. Notably, the bottom line beat the Zacks Consensus Estimate of 35 cents. Quarterly total revenues increased 12.4% year over year to $818.8 million, driven by continued growth in APAC (Asia Pacific) service providers and global webscale customers. The top line surpassed the Zacks Consensus Estimate of $791.72 million. (Read more: Ciena Q3 Earnings Beat Estimates, Revenues Up Y/Y)
5. Qualcomm Technologies International, Ltd, a subsidiary of QUALCOMM Incorporated (QCOM - Free Report) , introduced Qualcomm aptX Adaptive.
The next-generation audio codec, aptX Adaptive is designed to automatically adjust to the type of content consumed by consumers. This, in turn, helps in improving the audio quality apart from reducing latency in audio-visual content including videos and games. Combining superior audio quality, low-bit rate audio transmission and scalability, the innovative audio coding technology offers enhanced wireless listening experience for users in applications like mobile gaming, music and video. (Read more: QUALCOMM Unit Unveils aptX Adaptive to Boost User Experience)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the past six months.
In the past five trading days, Qualcomm was the major gainer with the share price increasing 2.4%. Juniper Networks, Inc. (JNPR - Free Report) was the major decliner with its stock losing 3%.
Over the past six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 14.6% while AT&T declined the most with its shares falling 15.3%.
Over the past six months, the Zacks Telecommunications Services industry has declined 2.9% while the benchmark S&P 500 Index has gained 6%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the outcome of trade-related talks with Canada and how the telecom sector braces itself for the impact of the trade war with China.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>