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AT&T's (T) Workforce on Strike, John Donovan to Hang Up Boots

Zacks Equity Research

Per media reports, more than 20,000 workers of AT&T Inc. T in nine Southern states recently went on strike, citing management’s bad bargaining practices over a new contract. The concerned workforce belongs to Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

The union — the Communications Workers of America — said that the telecom giant is not sending negotiators who have the authority to make decisions. In response, the company has refuted the union’s allegation of bad bargaining practices.

AT&T stated that the workers who have walked off are technicians and customer service representatives of its wireline home and business Internet and phone division, not its cellphone unit.

AT&T also said that a strike is in no one’s best interest. The company is surprised and disappointed that union leaders called for a strike at this point in the talks. It said that it is offering terms that would help the employees, some of whom average from $121,000 to $134,000 in compensation.

In a separate development, John Donovan — CEO of AT&T Communications — announced his intention to retire, effective Oct 1. For the past two years, Donovan has led the company’s largest business unit, AT&T Communications, a global telecom leader serving 100 million mobile, broadband and pay-TV customers in the United States. The company is expected to name a replacement for Donovan soon.

Over the past five years, AT&T has invested nearly $145 billion in wireless and wireline networks, including capital investments and acquisitions of wireless spectrum and operations. Its fiber network is one of the nation’s largest and connects more Internet of Things devices compared to any other provider in North America.

Moreover, AT&T aims to deploy a standards-based, nationwide mobile 5G network in early 2020. The company’s 5G service involves utilization of millimeter wave spectrum for deployment in dense pockets, while in suburban and rural areas, it plans to deploy 5G on mid- and low-band spectrum holdings.

In concert with technology partners, AT&T has made the world's first wireless 5G data transfer over millimeter wave using production equipment with a mobile form factor device. At present, the company’s 5G Evolution technology is live in more than 200 markets, and is expected to reach more than 400 markets by the end of 2019.

AT&T has long-term earnings growth expectation of 4.4%. Driven by diligent execution of operational strategies, the stock has rallied 22.4% compared with the industry’s growth of 10.8% in the year-to-date period.

AT&T currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are PCTEL, Inc. PCTI, Telenav, Inc. TNAV and Nokia Corp. NOK. While PCTEL sports a Zacks Rank #1 (Strong Buy), Telenav and Nokia carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PCTEL surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 146.4%.

Telenav surpassed earnings estimates twice in the trailing four quarters, the average positive surprise being 12%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

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