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Telecom Sector Q1 Earnings Performance a Mixed Bag So Far
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The first quarter of 2020 began on a positive note as the ‘Phase One’ trade deal between the United States and China aimed to weed out the uncertainty triggered by the prolonged trade war. The U.S. telecommunications industry was also on the cusp of a digital revolution, with leading carriers increasingly deploying 5G technology in select cities and aiming for a near-term nationwide rollout. A historic merger between the third and the fourth-largest carrier in the country further stole the limelight with the promise of superior connectivity and improved yet cheap services for users. Just when the industry began cruising on a smooth sail, the coronavirus pandemic ravaged the entire script and reshaped the sector dynamics.
The virus outbreak disrupted normal business operations and supply-chain mechanisms of various telecom companies as they preferred to exercise caution and put on hold their delivery schedules to and from China and other countries like South Korea until the health risks were neutralized. This, in turn, affected sector profitability and triggered insecurity within the industry.
Nevertheless, telecom firms have relentlessly provided the vital lifeline to countless humans as virtual communication has replaced in-person exchanges with social distancing and the work-from-home option in vogue. The firms have worked in unison to effectively handle the upsurge in data traffic, prompting the top administration to remain effusive about their contribution in the hour of crisis. Despite the enhanced efforts, telecom firms have incurred higher costs associated with bad debt, production shutdowns and expenses related to retail store closures leading to lower equipment sales and reduced advertising revenues. Moreover, companies are forced to redraw their distribution channels for evolving customer demands, redefine business plans to optimize operations and increase efficiencies to lower costs while supporting employees and customers with various financial packages.
Let us have a brief recap of how some of the leading firms performed in the first quarter.
Verizon Communications Inc. (VZ - Free Report) : Despite the worldwide mayhem induced by the coronavirus pandemic, Verizon started 2020 on a positive note, reporting relatively healthy first-quarter 2020 results, primarily led by the wireless business. With industry-leading wireless products and services, the company remains well poised to benefit from increased 5G deployment across the country under the new operational framework.
Excluding non-recurring items, adjusted earnings were $1.26 per share compared with $1.20 in the year-earlier quarter and beat the Zacks Consensus Estimate by 4 cents. Consolidated GAAP operating revenues for the quarter declined 1.6% year over year to $31,610 million as wireless service revenue growth was more than offset by lower wireless equipment revenues. The top line missed the consensus mark of $32,347 million.
AT&T Inc. (T - Free Report) reported relatively modest first-quarter 2020 results as the coronavirus pandemic hit the top line, fueling uncertainty within the organization and limiting future visibility. Despite the coronavirus leading to short-term financial impacts, the company expects to continue investing in key areas and adjust its business according to the demand of the situation to fuel long-term growth, while maintaining a healthy dividend payment and actively reducing debt.
Excluding non-recurring items, adjusted earnings were 84 cents per share compared with 86 cents in the year-earlier quarter. Quarterly GAAP operating revenues decreased 4.6% year over year to $42,779 million, largely due to lower revenues from legacy wireline services, WarnerMedia, domestic video and domestic wireless equipment, partially offset by growth in strategic and managed business services and domestic wireless services. The top line missed the Zacks Consensus Estimate of $44,213 million.
Corning Incorporated (GLW - Free Report) reported decent first-quarter 2020 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. However, revenues and earnings declined on a year-over-year basis.
Quarterly core net income came in at $177 million or 20 cents per share compared with 365 million or 40 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents. First-quarter GAAP net sales were down 15% year over year to $2,391 million due to the material impact of changing market and customer dynamics in the Optical Communications, Display Technologies and Environmental Technologies business segments.
Quarterly non-GAAP net income was $77.2 million or 23 cents per share compared with $92.7 million or 26 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 2 cents. First-quarter total net revenues amounted to $998 million (slightly below the low end of the company’s guidance) compared with $1,001.7 million reported in the year-ago quarter. The top line lagged the consensus mark of $1,006 million.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Telecom Sector Q1 Earnings Performance a Mixed Bag So Far
The first quarter of 2020 began on a positive note as the ‘Phase One’ trade deal between the United States and China aimed to weed out the uncertainty triggered by the prolonged trade war. The U.S. telecommunications industry was also on the cusp of a digital revolution, with leading carriers increasingly deploying 5G technology in select cities and aiming for a near-term nationwide rollout. A historic merger between the third and the fourth-largest carrier in the country further stole the limelight with the promise of superior connectivity and improved yet cheap services for users. Just when the industry began cruising on a smooth sail, the coronavirus pandemic ravaged the entire script and reshaped the sector dynamics.
The virus outbreak disrupted normal business operations and supply-chain mechanisms of various telecom companies as they preferred to exercise caution and put on hold their delivery schedules to and from China and other countries like South Korea until the health risks were neutralized. This, in turn, affected sector profitability and triggered insecurity within the industry.
Nevertheless, telecom firms have relentlessly provided the vital lifeline to countless humans as virtual communication has replaced in-person exchanges with social distancing and the work-from-home option in vogue. The firms have worked in unison to effectively handle the upsurge in data traffic, prompting the top administration to remain effusive about their contribution in the hour of crisis. Despite the enhanced efforts, telecom firms have incurred higher costs associated with bad debt, production shutdowns and expenses related to retail store closures leading to lower equipment sales and reduced advertising revenues. Moreover, companies are forced to redraw their distribution channels for evolving customer demands, redefine business plans to optimize operations and increase efficiencies to lower costs while supporting employees and customers with various financial packages.
Let us have a brief recap of how some of the leading firms performed in the first quarter.
Verizon Communications Inc. (VZ - Free Report) : Despite the worldwide mayhem induced by the coronavirus pandemic, Verizon started 2020 on a positive note, reporting relatively healthy first-quarter 2020 results, primarily led by the wireless business. With industry-leading wireless products and services, the company remains well poised to benefit from increased 5G deployment across the country under the new operational framework.
Excluding non-recurring items, adjusted earnings were $1.26 per share compared with $1.20 in the year-earlier quarter and beat the Zacks Consensus Estimate by 4 cents. Consolidated GAAP operating revenues for the quarter declined 1.6% year over year to $31,610 million as wireless service revenue growth was more than offset by lower wireless equipment revenues. The top line missed the consensus mark of $32,347 million.
AT&T Inc. (T - Free Report) reported relatively modest first-quarter 2020 results as the coronavirus pandemic hit the top line, fueling uncertainty within the organization and limiting future visibility. Despite the coronavirus leading to short-term financial impacts, the company expects to continue investing in key areas and adjust its business according to the demand of the situation to fuel long-term growth, while maintaining a healthy dividend payment and actively reducing debt.
Excluding non-recurring items, adjusted earnings were 84 cents per share compared with 86 cents in the year-earlier quarter. Quarterly GAAP operating revenues decreased 4.6% year over year to $42,779 million, largely due to lower revenues from legacy wireline services, WarnerMedia, domestic video and domestic wireless equipment, partially offset by growth in strategic and managed business services and domestic wireless services. The top line missed the Zacks Consensus Estimate of $44,213 million.
Corning Incorporated (GLW - Free Report) reported decent first-quarter 2020 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. However, revenues and earnings declined on a year-over-year basis.
Quarterly core net income came in at $177 million or 20 cents per share compared with 365 million or 40 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 3 cents. First-quarter GAAP net sales were down 15% year over year to $2,391 million due to the material impact of changing market and customer dynamics in the Optical Communications, Display Technologies and Environmental Technologies business segments.
Juniper Networks, Inc. (JNPR - Free Report) reported unimpressive first-quarter 2020 results, with the bottom and top lines missing the Zacks Consensus Estimate and declining year over year.
Quarterly non-GAAP net income was $77.2 million or 23 cents per share compared with $92.7 million or 26 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by 2 cents. First-quarter total net revenues amounted to $998 million (slightly below the low end of the company’s guidance) compared with $1,001.7 million reported in the year-ago quarter. The top line lagged the consensus mark of $1,006 million.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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