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Telecom Stock Roundup: Qualcomm Offers New Chip, Sprint's 5G Debut & More
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In the past five trading days, telecom stocks continued to trend higher on optimism over a likely long-term solution to the trade war. The bilateral trade talks between the United States and China seemed to strike the right chords over the past week as both sides signaled intentions to resolve their differences. The positive vibes impacted the equity markets and boosted investor sentiments, in turn, benefitting telecom stocks.
With significant progress in the negotiations, President Trump has reportedly extended the Mar 1 deadline to reach a sweeping agreement to end the trade skirmishes. A probable meeting between the top leaders of both the countries is also in the cards in late March. Trump further observed that key issues such as concerns related to technology transfer and intellectual property rights were ironed out, although no official statements were released in this regard. Media reports cited that commonality was reached on various matters that hitherto remained bone of contention between the two countries.
However, there seemed to be some lingering issues with difference of opinion on China’s subsidies, cyber theft, public sector enterprises and so-called forcible technology transfers. Common ground on a mutual enforcement mechanism remained particularly elusive. Although no apparent breakthrough has yet been made on such matters, the Trump administration maintained that the talks have been quite fruitful. Higher level meetings are scheduled to continue through the end of the week as both parties appear to be eager to walk the extra mile to strike a full-scale accord.
Meanwhile, Trump has urged the telecom firms to up the ante in the 5G race and encouraged healthy competition with global firms to maintain a competitive edge. He also stated that efforts should be made not to stifle competition in a veiled reference to efforts against Chinese telecom equipment manufacturers like Huawei. Nevertheless, the United States is moving closer to give the final touches to an executive order that could offer sweeping powers to the Commerce Department to review imported products by domestic firms and ban the outright sale of such equipment on grounds of national security interests. Industry observers feel that it could ultimately serve as a knell to some Chinese telecom firms and make it virtually impossible for them to operate in the U.S. shores if the bill is passed by President Trump. However, the proposed executive order is facing stiff opposition from rural telecom service providers that use low-cost Chinese equipment like that of Huawei.
Regarding company-specific news, product launches, 5G deployment, acquisition and earnings primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Qualcomm Incorporated (QCOM - Free Report) has redefined the computing and mobile ecosystem across the globe with the launch of QCA6390 Connectivity system-on-a-chip product. This game-changing and arguably the most advanced integrated offering yet from Qualcomm is likely to deliver path-breaking performance in the 5G era and provide it a competitive advantage against rivals.
Built on indigenous technologies, the QCA6390 is designed to meet the growing need for faster connectivity options and data speed. Supporting all the feature suites of both Wi-Fi 6 and Bluetooth 5.1, it offers faster, more secure and robust Wi-Fi experiences and enhanced Bluetooth capabilities. These include ultra-high-definition voice and low-latency gaming over wireless headphones, earbuds and speakers. (Read more: Qualcomm SoC to Revolutionize Mobile & Computing Ecosystem)
2. Sprint Corporation (S - Free Report) has announced that it will launch commercial 5G services spanning more than 1,000 square miles across nine U.S. cities in May. With rival firms already off the block in offering similar services to customers, the announcement is significant as the company advocates its long-awaited merger with T-Mobile US, Inc. (TMUS - Free Report) , which would then build an incredible nationwide 5G network.
Initially, Sprint will offer 5G services in Chicago, Atlanta, Dallas, Kansas City, Houston, Los Angeles, New York City, Phoenix and Washington DC. The company offers its customers three 5G devices to choose from — LG V50 ThinQ 5G, HTC 5G Hub and Samsung Galaxy S10 5G. (Read more: Sprint to Debut Commercial 5G Services in 9 Cities in May)
3. Ericsson (ERIC - Free Report) has announced that it is going to acquire Kathrein’s antenna and filters business to augment its Radio System portfolio with new products, while bolstering its in-house antenna capability. This marks a vital step in the company’s Networks portfolio strategy. Headquartered in Rosenheim, Germany, Kathrein is a leading provider of antenna and filter technologies, and an existing supplier to Ericsson. The financial terms of the deal, which is subject to customary closing conditions, remained undisclosed.
Notably, the buyout of Kathrein’s business is likely to enhance Ericsson’s competence in advanced antenna domain. With more focus on the antenna and filter business, the company aims to widen its offering to further optimize site space, which is important for the introduction of 5G. Moreover, the strategic move is expected to add nearly 4,000 skilled professionals in R&D, production, and sales based in more than 20 locations, including Germany, Romania, the United States, Mexico and China. (Read more: Ericsson Plans to Buy Kathrein's Antenna & Filters Business)
4. Nokia Corporation (NOK - Free Report) recently announced that it has inked a deal with Saudi Telecom Company (“STC”) to help the 5G network build-out of the latter in the region with its advanced products and services. STC is a Saudi Arabia-based telecommunications company that provides landline, mobile and Internet services to varied customers. The latest deal entails several firsts in STC’s network, including the launch of cloud RAN and AirScale, coupled with the deployment of the Wavence platform in microwave and AirScale indoor radio.
Notably, the Finnish telecom equipment manufacturer’s comprehensive solutions would be employed to build a 5G network first in the western and southern part of Saudi Arabia, including the holy cities of Makkah and Madinah. The rollout phase is currently underway and is expected to be completed by the end of 2020. (Read more: Nokia to Support STC's 5G Network Build-Out in Saudi Arabia)
5. Frontier Communications Corporation reported mixed fourth-quarter 2018 financial results, wherein revenues decreased year over year but net loss narrowed on the back of cost management.
Adjusted net loss for the quarter came in at $6 million or loss of 6 cents per share compared with a loss of $46 million or loss of 59 cents per share in the prior-year quarter. Quarterly revenues were $2,124 million compared with $2,217 million in the year-ago quarter. The year-over-year decline was primarily due to lower subsidy and regulatory revenues. (Read more: Frontier Communications Q4 Loss Narrows on Lower Costs)
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, Motorola Solutions was the biggest gainer with its share price increasing 2.6% while Harris Corporation was the biggest decliner with its shares down 1.9%.
Over the past six months, SBA Communications Corporation has been the best performer with its stock appreciating 12.7% while Qualcomm declined the most with its shares falling 26.5%.
Over the past six months, the Zacks Telecommunications Services industry has declined 1.6% while the S&P 500 fell 4.3%.
What’s Next in the Telecom Space?
In addition to product launches and deployment of 5G technologies, all eyes will remain glued to how the United States and China continue their negotiations for a long-term solution to the trade war.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Image: Bigstock
Telecom Stock Roundup: Qualcomm Offers New Chip, Sprint's 5G Debut & More
In the past five trading days, telecom stocks continued to trend higher on optimism over a likely long-term solution to the trade war. The bilateral trade talks between the United States and China seemed to strike the right chords over the past week as both sides signaled intentions to resolve their differences. The positive vibes impacted the equity markets and boosted investor sentiments, in turn, benefitting telecom stocks.
With significant progress in the negotiations, President Trump has reportedly extended the Mar 1 deadline to reach a sweeping agreement to end the trade skirmishes. A probable meeting between the top leaders of both the countries is also in the cards in late March. Trump further observed that key issues such as concerns related to technology transfer and intellectual property rights were ironed out, although no official statements were released in this regard. Media reports cited that commonality was reached on various matters that hitherto remained bone of contention between the two countries.
However, there seemed to be some lingering issues with difference of opinion on China’s subsidies, cyber theft, public sector enterprises and so-called forcible technology transfers. Common ground on a mutual enforcement mechanism remained particularly elusive. Although no apparent breakthrough has yet been made on such matters, the Trump administration maintained that the talks have been quite fruitful. Higher level meetings are scheduled to continue through the end of the week as both parties appear to be eager to walk the extra mile to strike a full-scale accord.
Meanwhile, Trump has urged the telecom firms to up the ante in the 5G race and encouraged healthy competition with global firms to maintain a competitive edge. He also stated that efforts should be made not to stifle competition in a veiled reference to efforts against Chinese telecom equipment manufacturers like Huawei. Nevertheless, the United States is moving closer to give the final touches to an executive order that could offer sweeping powers to the Commerce Department to review imported products by domestic firms and ban the outright sale of such equipment on grounds of national security interests. Industry observers feel that it could ultimately serve as a knell to some Chinese telecom firms and make it virtually impossible for them to operate in the U.S. shores if the bill is passed by President Trump. However, the proposed executive order is facing stiff opposition from rural telecom service providers that use low-cost Chinese equipment like that of Huawei.
Regarding company-specific news, product launches, 5G deployment, acquisition and earnings primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Qualcomm Incorporated (QCOM - Free Report) has redefined the computing and mobile ecosystem across the globe with the launch of QCA6390 Connectivity system-on-a-chip product. This game-changing and arguably the most advanced integrated offering yet from Qualcomm is likely to deliver path-breaking performance in the 5G era and provide it a competitive advantage against rivals.
Built on indigenous technologies, the QCA6390 is designed to meet the growing need for faster connectivity options and data speed. Supporting all the feature suites of both Wi-Fi 6 and Bluetooth 5.1, it offers faster, more secure and robust Wi-Fi experiences and enhanced Bluetooth capabilities. These include ultra-high-definition voice and low-latency gaming over wireless headphones, earbuds and speakers. (Read more: Qualcomm SoC to Revolutionize Mobile & Computing Ecosystem)
2. Sprint Corporation (S - Free Report) has announced that it will launch commercial 5G services spanning more than 1,000 square miles across nine U.S. cities in May. With rival firms already off the block in offering similar services to customers, the announcement is significant as the company advocates its long-awaited merger with T-Mobile US, Inc. (TMUS - Free Report) , which would then build an incredible nationwide 5G network.
Initially, Sprint will offer 5G services in Chicago, Atlanta, Dallas, Kansas City, Houston, Los Angeles, New York City, Phoenix and Washington DC. The company offers its customers three 5G devices to choose from — LG V50 ThinQ 5G, HTC 5G Hub and Samsung Galaxy S10 5G. (Read more: Sprint to Debut Commercial 5G Services in 9 Cities in May)
3. Ericsson (ERIC - Free Report) has announced that it is going to acquire Kathrein’s antenna and filters business to augment its Radio System portfolio with new products, while bolstering its in-house antenna capability. This marks a vital step in the company’s Networks portfolio strategy. Headquartered in Rosenheim, Germany, Kathrein is a leading provider of antenna and filter technologies, and an existing supplier to Ericsson. The financial terms of the deal, which is subject to customary closing conditions, remained undisclosed.
Notably, the buyout of Kathrein’s business is likely to enhance Ericsson’s competence in advanced antenna domain. With more focus on the antenna and filter business, the company aims to widen its offering to further optimize site space, which is important for the introduction of 5G. Moreover, the strategic move is expected to add nearly 4,000 skilled professionals in R&D, production, and sales based in more than 20 locations, including Germany, Romania, the United States, Mexico and China. (Read more: Ericsson Plans to Buy Kathrein's Antenna & Filters Business)
4. Nokia Corporation (NOK - Free Report) recently announced that it has inked a deal with Saudi Telecom Company (“STC”) to help the 5G network build-out of the latter in the region with its advanced products and services. STC is a Saudi Arabia-based telecommunications company that provides landline, mobile and Internet services to varied customers. The latest deal entails several firsts in STC’s network, including the launch of cloud RAN and AirScale, coupled with the deployment of the Wavence platform in microwave and AirScale indoor radio.
Notably, the Finnish telecom equipment manufacturer’s comprehensive solutions would be employed to build a 5G network first in the western and southern part of Saudi Arabia, including the holy cities of Makkah and Madinah. The rollout phase is currently underway and is expected to be completed by the end of 2020. (Read more: Nokia to Support STC's 5G Network Build-Out in Saudi Arabia)
5. Frontier Communications Corporation reported mixed fourth-quarter 2018 financial results, wherein revenues decreased year over year but net loss narrowed on the back of cost management.
Adjusted net loss for the quarter came in at $6 million or loss of 6 cents per share compared with a loss of $46 million or loss of 59 cents per share in the prior-year quarter. Quarterly revenues were $2,124 million compared with $2,217 million in the year-ago quarter. The year-over-year decline was primarily due to lower subsidy and regulatory revenues. (Read more: Frontier Communications Q4 Loss Narrows on Lower Costs)
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, Motorola Solutions was the biggest gainer with its share price increasing 2.6% while Harris Corporation was the biggest decliner with its shares down 1.9%.
Over the past six months, SBA Communications Corporation has been the best performer with its stock appreciating 12.7% while Qualcomm declined the most with its shares falling 26.5%.
Over the past six months, the Zacks Telecommunications Services industry has declined 1.6% while the S&P 500 fell 4.3%.
What’s Next in the Telecom Space?
In addition to product launches and deployment of 5G technologies, all eyes will remain glued to how the United States and China continue their negotiations for a long-term solution to the trade war.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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