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AT&T Extends Ties with Microsoft

Zacks Equity Research

AT&T, Inc. (T) recently announced the expansion of its business collaboration with Microsoft Corporation (MSFT) by incorporating Microsoft Lync to its Unified Communications (:UC) portfolio of services.

Microsoft Lync is an enterprise software, designed for corporate environments. The basic features of this product include instant messaging, Voice Over IP (VoIP), and video conferencing services. By adding Microsoft Lync to its advanced network, AT&T expects to woo the enterprise market, thereby gaining significant synergies.

AT&T, the largest wireless provider in the U.S., is looking for opportunities to improve its growth profile through a number of strategic initiatives. The company recently introduced a cloud-based Content Delivery Network (:CDN) platform. The attractively priced CDN offers best-in-class digital media solutions.

The company also collaborated with Zynga, a popular Web-based social gaming company to offer mobile social gaming options on its Google Inc. (GOOG) Android-based smartphones and tablets. Additionally, AT&T inked a multi-year deal with The Walt Disney Company (DIS) in Jan 2013, to provide Disney's sports, news and entertainment content to its TV customers. In January, the company also entered into a cloud-based video conferencing service agreement with Polycom.

We believe these initiatives coupled with AT&T’s networking infrastructure that combines Long Term Evolution (:LTE) and High-Speed Packet Access Plus (HSPA+) technologies, will support significant market penetration in the wireless space.

However, the company suffers through constant access line losses, competitive threats, heavy iPhone subsidies and federal regulations that could hold back its prospects.

AT&T has a Zacks Rank #3, implying a Hold rating.

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