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Telecom Stock Roundup: Verizon Acquires incubed, Nokia Partners Elisa & More
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The U.S. telecom stocks witnessed a flat trajectory over the past week as the industry remained mostly stuck in administrative limbo. Although the broader markets have mostly moved up in anticipation that the Congress will approve President Biden’s proposed $1.9 trillion stimulus bill, the telecom industry has remained overtly cautious due to lack of clarity over essential policy guidelines. In addition, a recent government decision to conduct a comprehensive review process of likely threats posed by China-based firms has laid the groundwork for a shift in policy matters related to perceived risks from such entities.
Earlier, the Trump administration primarily focused on ‘technology decoupling’ strategy, which aimed to enforce strict export restrictions based on national security grounds and limited the access to U.S. components and technology without prior government approval. However, unlike his predecessor, Biden seems more inclined toward "small yard, high fence" strategy that aims to take a more proactive approach in defining such technologies that are key to American national interests and employing stringent measures to protect them from extrinsic forces. Instead of an outright trade ban that largely affects the supply-chain mechanism, it intends to identify the source of the bottlenecks behind a product shortage and work in tandem with the industry to fix it so that business interests of domestic firms are not harmed. Although such an agile approach is praiseworthy, the list of technologies that are considered to be worthy of protection are yet to be revealed, thereby creating an element of uncertainty within the industry.
In tune with this policy shift, the U.S. Justice Department has asked the federal courts to put on hold the ongoing proceedings against restrictions imposed on TikTok by former President Donald Trump. Beijing-based ByteDance, the owner of TikTok, has also shelved its plans to sell its U.S. operations to a group led by Oracle Corporation. A large number of U.S. suppliers are further seeking additional time to appeal against various trade restrictions imposed against Huawei to improve their sales slump. Industry groups have called on the White House to devise a coherent digital policy to thwart the growing technology supremacy of the communist nation and expand broadband access within the country
Regarding company-specific news, acquisition, collaboration and quarterly results primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. (VZ - Free Report) has inked a definitive agreement for an undisclosed amount to acquire Austria-based software firm — incubed IT — in order to augment its robotic automation capabilities in industrial settings. The transaction is expected to close by the first half of 2021, subject to mandatory closing conditions and regulatory approvals.
Since its inception in 2011, this startup firm has created a niche market for hardware-independent software for localization and navigation of autonomous mobile robots and integrated fleet management system to coordinate multiple robots. These solutions typically form the foundation stones of terrestrial robotics and are likely to be a value addition for mobile robot orchestration, making processes and workflows more efficient and productive. Verizon aims to tap these functionalities to gain a competitive edge against rivals.
2. Nokia Corporation (NOK - Free Report) has joined forces with Elisa, a leading telecom operator in Finland, to drive industrial-grade private mobile networking across the country. Nokia has more than 260 large enterprise customers across industries, of which 30 have incorporated 5G.
Nokia and Elisa will collaborate on 5G private mobile offerings to help organizations accelerate their digitization journey and adopt the fourth industrial revolution solutions. The companies will use radio network infrastructure to deploy mission-critical private networks for businesses, which, in turn, will help enhance their productivity.
3. Altice USA, Inc. (ATUS - Free Report) reported solid fourth-quarter 2020 results with the top line and bottom line beating the respective Zacks Consensus Estimate. Despite a challenging macroeconomic environment, the company recorded solid customer additions driven by resilience in the business model and is likely to continue witnessing this growth momentum in 2021.
Net income in the December quarter was $330.5 million or 60 cents per share compared with $0.3 million or breakeven results on per share basis in the prior-year quarter. The improvement was primarily attributable to loss on extinguishment of debt in the prior-year quarter and lower restructuring expenses in the reported quarter. The bottom line surpassed the Zacks Consensus Estimate by 25 cents. Total revenues increased 2.5% year over year to $2,535.4 million on higher Broadband (up 14%) and News & Advertising revenues (up 29.7%). The top line beat the consensus mark of $2,530 million.
4. Iridium Communications Inc. (IRDM - Free Report) reported relatively healthy fourth-quarter 2020 results, with GAAP net loss narrowing year over year on higher revenues. Despite COVID-19 adversities, the company recorded double-digit subscriber growth in 2020 driven by a resilient business model and strength of its safety services and mobility platform.
On a GAAP basis, net loss in the December quarter was $7.9 million or loss of 6 cents per share compared with net loss of $107.9 million or loss of 82 cents per share in the prior-year quarter. The year-over-year improvement was mainly driven by higher revenues in the reported quarter and high debt extinguishment charges in the year-earlier quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 8 cents. Quarterly revenues totaled $146.5 million compared with $138.9 million in the year-ago quarter. The 5.5% growth was mainly driven by strength in subscriber equipment sales and higher engineering and support service revenues. The top line surpassed the consensus mark of $139 million.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, Verizon has been the best performer with its stock gaining 3.6%, while Juniper was the biggest decliner with its stock falling 11.5%.
Over the past six months, Arista has been the best performer with its stock appreciating 29.3%, while Verizon was the biggest decliner with its stock losing 3.6%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.3% on average while the S&P 500 has gained 17.6%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the Biden administration unfurls the telecom policy guidelines.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Telecom Stock Roundup: Verizon Acquires incubed, Nokia Partners Elisa & More
The U.S. telecom stocks witnessed a flat trajectory over the past week as the industry remained mostly stuck in administrative limbo. Although the broader markets have mostly moved up in anticipation that the Congress will approve President Biden’s proposed $1.9 trillion stimulus bill, the telecom industry has remained overtly cautious due to lack of clarity over essential policy guidelines. In addition, a recent government decision to conduct a comprehensive review process of likely threats posed by China-based firms has laid the groundwork for a shift in policy matters related to perceived risks from such entities.
Earlier, the Trump administration primarily focused on ‘technology decoupling’ strategy, which aimed to enforce strict export restrictions based on national security grounds and limited the access to U.S. components and technology without prior government approval. However, unlike his predecessor, Biden seems more inclined toward "small yard, high fence" strategy that aims to take a more proactive approach in defining such technologies that are key to American national interests and employing stringent measures to protect them from extrinsic forces. Instead of an outright trade ban that largely affects the supply-chain mechanism, it intends to identify the source of the bottlenecks behind a product shortage and work in tandem with the industry to fix it so that business interests of domestic firms are not harmed. Although such an agile approach is praiseworthy, the list of technologies that are considered to be worthy of protection are yet to be revealed, thereby creating an element of uncertainty within the industry.
In tune with this policy shift, the U.S. Justice Department has asked the federal courts to put on hold the ongoing proceedings against restrictions imposed on TikTok by former President Donald Trump. Beijing-based ByteDance, the owner of TikTok, has also shelved its plans to sell its U.S. operations to a group led by Oracle Corporation. A large number of U.S. suppliers are further seeking additional time to appeal against various trade restrictions imposed against Huawei to improve their sales slump. Industry groups have called on the White House to devise a coherent digital policy to thwart the growing technology supremacy of the communist nation and expand broadband access within the country
Regarding company-specific news, acquisition, collaboration and quarterly results primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. (VZ - Free Report) has inked a definitive agreement for an undisclosed amount to acquire Austria-based software firm — incubed IT — in order to augment its robotic automation capabilities in industrial settings. The transaction is expected to close by the first half of 2021, subject to mandatory closing conditions and regulatory approvals.
Since its inception in 2011, this startup firm has created a niche market for hardware-independent software for localization and navigation of autonomous mobile robots and integrated fleet management system to coordinate multiple robots. These solutions typically form the foundation stones of terrestrial robotics and are likely to be a value addition for mobile robot orchestration, making processes and workflows more efficient and productive. Verizon aims to tap these functionalities to gain a competitive edge against rivals.
2. Nokia Corporation (NOK - Free Report) has joined forces with Elisa, a leading telecom operator in Finland, to drive industrial-grade private mobile networking across the country. Nokia has more than 260 large enterprise customers across industries, of which 30 have incorporated 5G.
Nokia and Elisa will collaborate on 5G private mobile offerings to help organizations accelerate their digitization journey and adopt the fourth industrial revolution solutions. The companies will use radio network infrastructure to deploy mission-critical private networks for businesses, which, in turn, will help enhance their productivity.
3. Altice USA, Inc. (ATUS - Free Report) reported solid fourth-quarter 2020 results with the top line and bottom line beating the respective Zacks Consensus Estimate. Despite a challenging macroeconomic environment, the company recorded solid customer additions driven by resilience in the business model and is likely to continue witnessing this growth momentum in 2021.
Net income in the December quarter was $330.5 million or 60 cents per share compared with $0.3 million or breakeven results on per share basis in the prior-year quarter. The improvement was primarily attributable to loss on extinguishment of debt in the prior-year quarter and lower restructuring expenses in the reported quarter. The bottom line surpassed the Zacks Consensus Estimate by 25 cents. Total revenues increased 2.5% year over year to $2,535.4 million on higher Broadband (up 14%) and News & Advertising revenues (up 29.7%). The top line beat the consensus mark of $2,530 million.
4. Iridium Communications Inc. (IRDM - Free Report) reported relatively healthy fourth-quarter 2020 results, with GAAP net loss narrowing year over year on higher revenues. Despite COVID-19 adversities, the company recorded double-digit subscriber growth in 2020 driven by a resilient business model and strength of its safety services and mobility platform.
On a GAAP basis, net loss in the December quarter was $7.9 million or loss of 6 cents per share compared with net loss of $107.9 million or loss of 82 cents per share in the prior-year quarter. The year-over-year improvement was mainly driven by higher revenues in the reported quarter and high debt extinguishment charges in the year-earlier quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 8 cents. Quarterly revenues totaled $146.5 million compared with $138.9 million in the year-ago quarter. The 5.5% growth was mainly driven by strength in subscriber equipment sales and higher engineering and support service revenues. The top line surpassed the consensus mark of $139 million.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, Verizon has been the best performer with its stock gaining 3.6%, while Juniper was the biggest decliner with its stock falling 11.5%.
Over the past six months, Arista has been the best performer with its stock appreciating 29.3%, while Verizon was the biggest decliner with its stock losing 3.6%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.3% on average while the S&P 500 has gained 17.6%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the Biden administration unfurls the telecom policy guidelines.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>