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Telecom Stock Roundup: AT&T-Google Team Up, Qualcomm Unveils XR & More

Supriyo Bose
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In the last five trading days, telecom stocks declined initially and traded flat thereafter only to decline further as concerns related to the U.S-China trade war resumed in a dramatic turn of events.

Last week, President Trump revealed that the U.S. administration reached a settlement on ZTE as part of the ongoing trade talks between the two warring countries. This included a fine of $1.3 billion against ZTE, restructuring of its management and hiring of American compliance officers at the company. In return, the Commerce Department lifted the seven-year ban on the Chinese firm related to the purchase of components from U.S. manufacturers that threatened its survival and crippled operations.

Just when it appeared that things were working toward reducing the United States’ negative balance of trade against China, President Donald Trump flip-flopped on his trade policy and renewed threats to impose 25% tariffs on $50 billion worth of Chinese goods to retaliate against unfair trade practices. Some industry observers believe that the tactic is part of Trump’s broader plan to gain leverage in the trade talks as Commerce department secretary Wilbur Ross is scheduled to visit China later this week. However, the volte-face could derail the trade negotiations as China vouched to counter the move with similar restrictions.  

Regarding company-specific news, improved product launches for superior connectivity and high-quality content to subscribers at lower cost of ownership, and technology collaborations ruled the roost over the last five trading days.

Recap of the Week’s Most Important Stories

1.    CenturyLink, Inc. CTL recently secured the industry’s first certifications for alliance partners from Cisco Systems, Inc. related to its cloud and managed DNA services based on the Cisco Meraki platform. The accreditation validates the ability of CenturyLink to continually deliver the highest levels of performance on certification criteria.

CenturyLink’s Cisco Meraki solution facilitates enterprise customers to efficiently deploy and monitor Wi-Fi networks, wireless, phone, video surveillance and security services without compromising on security issues through a single administrative dashboard for an improved customer experience. (Read more: CenturyLink Secures Industry-First Certifications From Cisco)

2.    In a concerted move to facilitate businesses augment productivity through seamless cloud connectivity, AT&T Inc. T has collaborated with Google Cloud — a suite of cloud computing services offered by Alphabet Inc.

By utilizing the combined capacity of Google Cloud Partner Interconnect through AT&T NetBond for Cloud, businesses of all sizes will be able to move data across multiple cloud environments without compromising on security by eliminating the use of public Internet. In addition, users will benefit from G Suite — Google's cloud-based productivity suite for business such as Gmail, Docs and Drive — that would be readily available through AT&T Collaborate, a hosted voice and collaboration solution for businesses. This, in turn, will enable business entities to get access to a single source for chat, voice, video and desktop sharing to improve productivity and increase flexibility for a mobile employee base. (Read more: AT&T Partners With Google for Seamless Cloud Connectivity)

3.    Viasat, Inc. VSAT reported better-than-expected results in the fourth quarter of fiscal 2018.

Non-GAAP net loss was $3.1 million or a loss of 5 cents per share versus net income of $18.5 million or 32 cents in the year-earlier quarter. Adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 19 cents. Quarterly total revenues increased 5.6% year over year to $439.7 million, primarily driven by strong performance by the Commercial Networks and Government Systems segments. The top line surpassed the Zacks Consensus Estimate of $424 million. (Read more: Viasat Q4 Loss Narrower Than Estimates, Revenues Beat)

4.    Windstream Holdings, Inc. WIN completed its 1-for-5 reverse stock split process to pull up its sagging share price.

The SEC guidelines mandate a listed company to maintain a minimum share price of $1.00. If the share price of the company falls below the $1.00 floor price for 30 consecutive days, it risks delisting. The current price trend of Windstream suggests that this may be a major reason behind the reverse stock split move. (Read more: Windstream's Reverse Stock Split to Attract More Investors?)

5.    Qualcomm Incorporated QCOM introduced the world’s first dedicated Extended Reality (XR) platform, the Qualcomm Snapdragon XR1 via its subsidiary, Qualcomm Technologies, Inc.

The XR1 Platform contains all the necessary materials required for original equipment manufacturers (OEM) to build next generation AR and VR devices. It has diverse compute architecture, including an AI engine. This will enable richer interactive experiences with better power and thermal efficiency. The company also announced that OEMs Meta, VIVE, Vuzix and Pico have already adopted the XR1 platform and started developing it. (Read more: Qualcomm Debuts on XR Platform With Snapdragon XR1)

Price Performance

The following table shows the price movement of some of the major telecom stocks over the past week and during the last six months.

In the last five trading days, Sprint Corporation S was the major gainer with its share price up 1.5%. Harris Corporation HRS and Juniper Networks, Inc. JNPR were the major decliners, with each stock losing 0.8%.

Over the last six months, Motorola Solutions, Inc. MSI was the best performer with its stock appreciating 15% while Sprint declined the most with its shares falling 14.4%.

Over the last six months, the Zacks Telecommunications Services industry has underperformed the benchmark S&P 500 Index with a decline of 8.8% against a gain of 3% for the latter.

What’s Next in the Telecom Space?

In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the latest developments of the U.S.-China trade war.

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Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
Harris Corporation (HRS) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
Viasat Inc. (VSAT) : Free Stock Analysis Report
AT&T Inc. (T) : Free Stock Analysis Report
Sprint Corporation (S) : Free Stock Analysis Report
CenturyLink, Inc. (CTL) : Free Stock Analysis Report
Windstream Holdings, Inc. (WIN) : Free Stock Analysis Report
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