Telecom Stock Roundup: AT&T, Corning Trump Q4 Earnings Estimates & More
Zacks Investment Research | Jan 30, 2020 07:42AM ET
In the past five trading days, telecom stocks mirrored the broader S&P 500 Index and trended down amid fears of coronavirus outbreak hurting the global economy. With the U.S. Centers for Disease Control and Prevention reporting the first case of the contagious disease in the country, the markets remained apprehensive about possible repercussions. However, as the onus shifted to the corporate earnings season, markets gradually scripted a turnaround at the later stages of the week, driven by healthy sector earnings.
China has been one of the most important markets for U.S. telecom firms. Despite quarantines and other safety measures, coronavirus, which originated in Wuhan, China, reportedly spread across continents, disrupting normal business operations and supply-chain mechanisms of various companies. Widespread fears of a similar pandemic led by the SARS outbreak in the country in 2003 fueled uncertainty within the rank and files in the industry, leading to a downtrend. Most companies preferred to exercise caution and held their delivery schedules to and from the communist nation until the health risks were neutralized.
The U.S. Department of Justice has sought temporary restraining orders on five domestic companies for fostering the robocall menace. The federal authorities are actively trying to eliminate the spurious calls that threaten to con unsuspecting customers and have asked the telecom firms to step up efforts in this regard.
Meanwhile, defying President Trump’s advisories, the U.K. government has allowed China-based telecom equipment manufacturer Huawei to play a limited role in the 5G mobile network rollout across the country. Although Huawei’s participation has been mostly restricted to non-core areas that do not involve ‘sensitive functions’, it is likely to encourage other EU countries to follow suit and allow the company to gain a sizeable share in European markets. This, in turn, is likely to sow seeds of disharmony among the United States and its allies and compound problems for the industry in the future. The battle lines for 5G dominance is likely to be redrawn as Huawei CFO is fighting the U.S. extradition case in Canada, with a probable escalation in other prohibitory orders.
Regarding company-specific news, quarterly earnings and strategic collaborations took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. AT&T Inc. (NYSE:T) ticked all the boxes it had set to achieve in 2019 and reported healthy fourth-quarter results with solid cash flow and adjusted earnings.
Excluding non-recurring items, adjusted earnings for the quarter were 89 cents per share compared with 86 cents in the year-earlier quarter, and exceeded the Zacks Consensus Estimate by a penny. Quarterly GAAP operating revenues decreased 2.4% year over year to $46,821 million, largely due to lower revenues from legacy wireline services, WarnerMedia and domestic video, partially offset by growth in strategic and managed business services, domestic wireless services and IP broadband. The top line missed the Zacks Consensus Estimate of $46,900 million. (Read more: Zacks Investment Research
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