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The Zacks Analyst Blog Highlights: AT&T, Verizon Communications, Atlantic Tele-Network, Leap Wireless International and Smithfield Foods

Zacks Equity Research

For Immediate Release
Chicago, IL – September 26, 2013 – 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 the AT&T Inc. ( T- Free Report), Verizon Communications Inc. ( VZ- Free Report), Atlantic Tele-Network Inc. ( ATNI- Free Report), Leap Wireless International Inc. ( LEAP- Free Report) and Smithfield Foods, Inc. ( SFD- Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Wednesday’s Analyst Blog:

AT&T Enters Global Wi-Fi Agreement

AT&T Inc. ( T- Free Report) announced its collaboration with Global Wi-Fi Network provider, Fon for providing global Wi-Fi roaming facility to its customers. Per the new agreement, AT&T customers will be able to access Fon’s Wi-Fi hotspots while traveling internationally. In exchange, customers using Fon network can connect through over 30,000 AT&T hotspots across the U.S. The agreement covers smartphones, tablets and other Wi-Fi enabled devices.

The new agreement will benefit AT&T customers who are frequent overseas travelers and are charged heavily on data roaming facilities.  As a result, the new deal will not only help in retaining customers but will also attract new, high-value corporate customers  who would find the roaming-charge free data connectivity cost effective. Further, the new agreement entails a competitive advantage over rivals such as like Verizon Communications Inc. ( VZ- Free Report).  

To carve a niche in a mature and highly competitive U.S. telecom market and to fortify its existing position, AT&T is taking several strategic steps. Recently, the company completed the acquisition of Alltel’s wireless operations from Atlantic Tele-Network Inc. ( ATNI- Free Report) for $780 million and is heading toward another big budget takeover of Leap Wireless International Inc. ( LEAP- Free Report) – for $1.2 billion. This deal is currently awaiting regulatory approval.

The company’s attempt to grow inorganically through various acquisitions is primarily due to the kind of pressure it is facing from intense competition and increasing market consolidation in the U.S. telecom industry. In the recent past, the acquisitions of Clearwire Corp. by Sprint and of MetroPCs by T-Mobile US, Inc.’s bear testimony to this theory. 

In a saturated U.S. wireless market, spectrum crunch has become a major issue. Most carriers are finding it increasingly difficult to manage mobile data traffic, which is growing by leaps and bounds. The situation has become even more acute with the growing popularity of iPhone and Android smartphones as well as rising online mobile video streaming, cloud computing and video conferencing services.

While these issues have created several headwinds for telecom operators, large carriers like AT&T are benefiting from the situation given their financial capabilities. On the one hand, the company’s is looking for a lucrative partnership to expand its services and infrastructure without heavy investments on the other hand it is acquiring companies with potential for growth that can also satisfy spectrum demand.  As a result, we foresee AT&T’s growth trajectory to remain consistent despite the macroeconomic subtlety and pricing pressure hurting its near-term financials.

AT&T currently has a Zacks Rank #3 (Hold).

Smithfield Shareholders Approve Merger

Overcoming safety concerns and a rigorous review process, shareholders of U.S. meat producer Smithfield Foods, Inc. ( SFD- Free Report) have finally approved the company’s proposed merger deal with Hongkong-based Shuanghui International Holdings Limited. Smithfield shareholders unanimously approved the decision as more than 96% of the votes were cast in favor of the deal during a special meeting yesterday.

Per the deal signed on May 30, Shuanghui will acquire all of the outstanding shares of Smithfield for $34.00 per share, totaling $7.1 billion, including Smithfield’s debt. The deal is expected to close on Sep 26, after which Smithfield will not trade publicly and will become a wholly-owned subsidiary of Shuanghui. It will operate as Smithfield Foods. There will be no change in the company’s management team and all the employees of Smithfield will be retained.

The deal comes at a time when China is facing serious food safety issues, which also raised questions over this merger. U.S. regulators were concerned that the deal would jeopardize the American food supply chain and harm the entire U.S. pork industry as they did not find Shuanghui’s food safety practices in China acceptable.

However, Smithfield’s CEO had assured that the transaction will have no impact on the U.S. food supply and the company will continue to produce pork maintaining highest food safety standards and abiding by the U.S. regulations. The Committee on Foreign Investment in the United States (:CFIUS) approved the proposed merger deal on Sep 6 after a 45-day review period in order to check the food safety standards.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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