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The Zacks Analyst Blog Highlights: AT&T, Apple, Verizon Communications, Sprint Nextel and Vodafone


For Immediate Release

Chicago, IL – September 25, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include AT&T Inc. (T), Apple Inc. (AAPL), Verizon Communications Inc. (VZ), Sprint Nextel Corp. (S) and Vodafone Plc (VOD).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Monday’s Analyst Blog:

AT&T Leads iPhone 5 Sales

The second-largest U.S. mobile service provider AT&T Inc. (T) is dominating the market for Apple Inc.’s (AAPL) iPhone 5 sales. The company saw an astounding demand for the new iPhone, despite two of its rival carriers also offering the product.

According to the latest study from ComScore, AT&T leads the pre-orders for the hot iconic device with about 68% of total online sales in the first three days. This records the best order ever received by AT&T for the iPhones. The other two major rivals – Verizon Communications Inc. (VZ) and Sprint Nextel Corp. (S) – accounted for just 24% and 8% share of iPhone 5 sales, respectively.

AT&T had been the exclusive provider since 2007, when the first iPhone was launched. However, this uniqueness was lost to the wireless kingpin Verizon Wireless, a joint venture between Verizon Communications and Vodafone Plc (VOD), in February last year. Despite this loss, AT&T made a new record for the iPhone 4S in October last year and received more than 200,000 preorders within 12 hours of the start of booking.

When compared to the aforementioned 68% share of iPhone 5 sales, AT&T received merely 48% of pre-orders for iPhone 4S in the first three days and was followed by 35% for Verizon and 17% for Sprint. This suggests that though AT&T is behind Verizon in deploying 4G LTE services needed for iPhone 5, the existing customers, who are eligible for upgrades, are boosting demand for the new product.

Going by the iPhones’ track record, we expect AT&T to gain more subscribers from the new iPhone 5 and consequently will be raking in higher revenues. While iPhones are offering a strong growth momentum, the related high-marketing cost is hurting AT&T’s earnings. The company now has to pay $100 extra per phone to Apple, when compared to previous iPhone 4S, in the form of subsidy. Thereby, this lofty subsidy of $400 per iPhone 5 will be dilutive to the company’s earnings for the next several quarters.

According to several analysts, AT&T’s wireless EBITDA margin would decline from 45% in the second quarter to 40.8% in the third and then 35.7% in the fourth quarter. As a result, 3 out of 27 analysts have revised the third quarter estimates downward over the last week. The Zacks Consensus Estimate fell by a penny to 63 cents, representing only 4.01% year-over-year growth.

We are maintaining our long-term Neutral recommendation on AT&T. The company retains the Zacks # 3 (Hold) Rank for the short term (1–3 months).

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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Read the analyst report on T

Read the analyst report on AAPL

Read the analyst report on VZ

Read the analyst report on S

Read the analyst report on VOD

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