Telecom Stock Roundup: AT&T, Verizon Miss Q1 Revenue Estimates & More
Zacks Investment Research | Apr 25, 2019 08:17AM ET
In the past five trading days, telecom stocks maintained a flat trajectory for the most of the week but declined sharply at the final stages due to lackluster quarterly results by some of the sector biggies. In addition to the muted earnings performance, the industry remained mired in uncertainty regarding the probable merger of T-Mobile US Inc. (NYSE:S) and Sprint Corporation (NYSE:S) . With the industry at the threshold of a nationwide 5G launch, stiff resistance from the Department of Justice antitrust staff seems to have dented the competitive edge of the telecom sector in general and some of its leading firms in particular.
The overall earnings season has unfolded on a relatively promising note, with better-than-expected performance by most sectors dispelling widespread recessionary fears. Buoyed by the renewed optimism and encouraging trends from the hitherto declared results, the equity markets are currently trading near record highs and appear well poised to continue the uptrend.
However, the Technology sector, of which the Telecom stocks are part, has recorded a sedate start to the earnings season and is on track to record one of the softest performances in recent years. Taking the broader picture in count, the industry appears to be still grappling with the aftereffects of the trade war and higher investments for technology and infrastructure upgrade for 5G deployments.
Uncertainty regarding U.S.-China trade negotiations remained another stumbling block, as the nine-month old trade war that disrupted supply chains and weighed on the world economy is yet to be fully resolved. Although both the warring countries have agreed upon the enforcement mechanisms, the finer details are reportedly still under deliberations. As the industry awaits an early resolution to the prolonged bilateral talks to better focus on the impending 5G boom, efforts are on to give a final push to a mutually acceptable trade deal by May end that is easily enforceable.
Regarding company-specific news, quarterly earnings primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. AT&T Inc. (NYSE:T) recorded first-quarter 2019 adjusted earnings of 86 cents per share compared with 85 cents in the year-earlier quarter, which beat the Zacks Consensus Estimate by a penny.
Although consolidated revenues increased 17.8% year over year to $44,827 million, due to the accretive Time Warner acquisition and solid performances by domestic wireless services and advertising unit Xandr, it missed the Zacks Consensus Estimate of $45,093 million. (Read more: Zacks Investment Research
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