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Telecom Stock Roundup: Sprint, DISH and Charter Communications Post Disappointing Earnings Results

Last week, the telecom sector did not witness any notable event. In fact, telecom giant Sprint Corp. (S) along with cable TV operators DISH Network Corp. (DISH) and Charter Communications Inc. (CHTR) reported dismal financial results. Sprint lost a substantial number of postpaid wireless subscribers, while DISH and Charter Communications continues to lose video customers.

Moreover, Qualcomm Inc. (QCOM), globally the largest mobile chipset developer, reported lackluster earnings results and also provided a disappointing financial outlook.

On the other hand, small-sized and regional telecom operators, namely United States Cellular Corp. (USM), Telephone and Data Systems Inc. (TDS), Cincinnati Bell Inc. (CBB) and Frontier Communications Corp. (FTR) posted better-than-expected third quarter 2014 earnings results.

Recap of the Week’s Most Important Stories

1. Sprint reported disappointing financial results for the second quarter of fiscal 2014. Both the top and the bottom lines fell below the respective Zacks Consensus Estimate.Quarterly net loss stood at $765 million or 19 cents per share compared with a net loss of $699 million or 18 cents per share in the year-ago quarter.

Net loss per share of 19 cents was significantly wider than the Zacks Consensus Estimate of 5 cents. Quarterly total revenue came in at $8,488 million, up 9% year over year but failed to meet the Zacks Consensus Estimate of $8,651 million. (Read More: Sprint Posts Wider-Than-Expected Q2 Loss, Shares Slide.)

2. DISH Network declared dismal third-quarter 2014 financial numbers, wherein both the bottom and the top line missed the Zacks Consensus Estimate. Quarterly net income came in at $145.5 million or 31 cents per share compared with net income of $314.9 million or 68 cent in the year-ago quarter.

Earnings also missed the Zacks Consensus Estimate of 41 cents. Quarterly total revenue stood at approximately $3,679.3 million, up 5% year over year but below the Zacks Consensus Estimate of $3,701 million. (Read More: DISH Network Misses Q3 Earnings, Revenue Estimates.)

3. Frontier Communications reported its third-quarter 2014 adjusted earnings per share of 5 cents that came a penny ahead of the Zacks Consensus Estimate. The bottom line, however, declined 16.7% on a year-over-year basis. Quarterly revenues of $1,140.9 million, which came in line with the Zacks Consensus Estimate, dropped 3.7% year over year. The year-over-year decrease in the top line was primarily due to decline in revenues from voice services and data and internet services. (Read More: Frontier (FTR) Tops Earnings by a Penny, Revenues in Line.)

4. United States Cellular reported third-quarter 2014 loss per share of 26 cents, narrower than the Zacks Consensus Estimate of a loss of 27 cents. However, the bottom line also showed a marked deterioration from the year-ago quarter’s loss per share of 12 cents. Third-quarter revenues of $1,000.4 million breezed past the Zacks Consensus Estimate of $980 million and also increased 7% from $939.2 million reported in the year-ago quarter. (Read More: United States Cellular Q3 Loss Narrower Than Expected.)

5. Charter Communications reported disappointing financial results for the third quarter of 2014. GAAP net loss in the reported quarter stood at $53 million or 49 cents per share compared with a net loss of $70 million or 68 cents per share in the year-ago quarter. Quarterly, loss per share of 49 cents was significantly wider than the Zacks Consensus Estimate of a loss of 5 cents. Total revenue in the reported quarter came in at $2,287 million, up 8% year over year but slightly below the Zacks Consensus Estimate of $2,291 million. (Read More: Charter Communications Q3 Loss Wider than Expected.)

Price Performance

The following table shows the price movement of major telecom players over the past week and the last 6 months.

Company

Last Week

Last 6 Months

VZ

+1.02%

+8.56%

T

+1.51%

+0.23%

S

-18.00%

-43.84%

TMUS

-0.18%

-10.42%

VOD

+0.91%

-8.51%

CHL

+1.94%

+36.66%

AMX

+1.17%

+20.61%

CMCSA

+0.35%

+4.02%

DISH

+1.78%

+0.40%

Over the last five trading sessions, the price movement for most of the major telecom stocks was marginal. However, a notable exception to this trend was Sprint which lost a substantial 18% of value during the same time period.

Over the last 6 months, the price performance of major telecom stocks was positive. China Mobile and America Movil witnessed considerable rally in stock prices of 36.66% and 20.61%, respectively while Sprint collapsed a massive 43.84% and T-Mobile US lost 10.42% of value over the same time frame.

What’s Next in the Telecom Sector?

In the coming week, several non-U.S. telecom giants are scheduled to release their earnings results. Notable among them are Canadian telecom operators BCE Inc. and Telus Corp. and European telecom behemoths Vodafone and Telefonica. The last two companies also have significant operations in Latin American regions. Therefore, investors will get an idea about the current situation of global telecom industry.

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