In the past five trading days, telecom stocks initially witnessed an uptrend and followed a relatively flat trajectory thereafter, only to decline in the later stages due to macroeconomic concerns. As the earnings season gains steam, equity markets appear a bit shaky with high volatility and lower-than-expected performance from the technology sector, of which telecom is part.
The benchmark S&P 500 Index continued its downtrend throughout the past week, the longest streak since Donald Trump’s election, with the technology sector taking the hardest hit. As investors looked for safe haven assets, treasury yields inched up. The increase in government bond yield can also be attributed to expectations of higher economic growth in the third quarter of 2018. Per the latest jobs report, unemployment rate declined to a 49-year low of 3.7% in the United States, fuelling speculations of a likely Fed hike later this year and up to four times in 2019. In addition, the unrelenting trade war tensions with China appear to dent the long-term profitability of the telecom firms. All these macroeconomic headwinds are likely to hold down the sector positives and mar the healthy growth momentum.
Regarding company-specific news, product launches, strategic deals and technological collaborations took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Viasat, Inc. (VSAT - Free Report) has introduced cloud-enabled artificial intelligence and machine learning capabilities over its global satellite communications (SATCOM) network. The value-added features will enable warfighters to make more accurate, informed and lifesaving decisions with accelerated speed across the battlespace.
Viasat has partnered with various cloud computing providers across the globe to embed these features through its secure, high-speed and resilient SATCOM network and line of sight tactical network technologies. These have helped the company to deliver state-of-the-art Internet of battlefield things to significantly improve military readiness and mission effectiveness for the defense entities. (Read more: Viasat Introduces AI & ML Capabilities Over SATCOM Network)
2. In a concerted effort to augment public safety and better support law enforcement officials with cutting-edge technology, Verizon Communications Inc. (VZ - Free Report) will offer seamless connectivity to body-worn cameras. The company has inked an agreement to this effect with Axon Enterprise, Inc., a leading provider of techno-savvy products focused on law enforcement technologies, for an undisclosed amount.
Verizon will provide connectivity features to Axon’s first connected body-worn camera Axon Body 3. With attributes like live streaming, gunshot detection and the ability to preview and upload critical evidence in real time from the field, Axon Body 3 will offer an unmatched real-time situational awareness to security personnel. The product boasts a sleek yet rugged design and captures the best evidence with four built-in microphones, reduced motion blur and improved low-light performance. Axon Body 3 camera also possesses artificial intelligence capabilities for better crime solving and prevention. (Read more: Verizon Boosts Public Safety With Axon Body 3 Connectivity)
3. BlackBerry Limited (BB - Free Report) has announced that it is adding a quantum-resistant code signing server to its range of cryptography tools. To be offered from November 2018, the solution will allow software to be digitally signed using a scheme that will be tough to break with a quantum computer.
Notably, BlackBerry’s quantum-resistant code signing server uses cryptographic libraries from ISARA Corporation — a leader in agile quantum-safe security solutions. Together, the companies aim to protect software of long-lived assets against an increasingly risky computing ecosystem with continuous security threats. (Read more: BlackBerry Extends Services Portfolio to Drive Revenues)
4. AT&T Inc. (T - Free Report) and its new subsidiary, AT&T Insurance Agency, LLC, have partnered with Lockton Affinity and CNA Financial Corp. to make cyber insurance policies available to small and mid-sized enterprises. CNA is one of the largest U.S. commercial property and casualty insurance companies.
The strategic move gives AT&T Business customers access to a full range of cyber risk management solutions, which will help them holistically mitigate and transfer cyber risks. With this, customers of AT&T Managed Cybersecurity Solutions will have access to policies that are underwritten by CNA, with Lockton Affinity serving as the insurance broker. (Read more: AT&T Partners with Lockton Affinity & CNA to Expand Business)
5. Motorola Solutions, Inc. (MSI - Free Report) announced that it has been awarded a contract by the Florida Department of Management Services to build and manage the new statewide Project 25 public safety radio system.
Per the deal, Motorola will provide the state administration with an interoperable ASTRO 25 land mobile radio system for better coverage, reliability and audio clarity for first responders across the region. Notably, the new Statewide Law Enforcement Radio System buildout, valued more than half a billion dollars, is slated to begin in 2020. (Read more: Motorola Expands Public Safety Portfolio to Drive Revenues)
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, Verizon was the only gainer, with its share price increasing 0.1%. QUALCOMM Incorporated (QCOM - Free Report) was the major decliner, with its stock losing 8.9%.
Over the past six months, Qualcomm has been the best performer, with its stock appreciating 17.3%, while SBA Communications Corporation (SBAC - Free Report) declined the most, with its shares falling 7.5%.
Over the past six months, the Zacks Telecommunications Services industry recorded an average decline of 1.7%, while the S&P 500 gained 4.6%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to how the industry fares in the earnings season.
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