Telecom Stock Roundup: Ericsson Powers Connected Vehicle, Knowles' Buyout & More

In the past five trading days, telecom stocks continued to rally as the United States and China reportedly made healthy progress in their trade negotiations and remained poised to ink the “Phase One" deal in early January. The pre-Christmas rally was further buoyed by the proposed tariff cuts by the communist nation to boost the economy. With U.S. firms likely to gain greater market access in China per the partial trade accord, the New Year appears to be quite promising for the beleaguered industry.

As part of the camaraderie, China has increased its import basket of U.S. agricultural products like soybeans. The latest move follows a pledge by the Asian superpower to purchase $200 billion of U.S. goods over the next two years, including $40-$50 billion of agricultural products each year. In addition, China has decided to cut tariffs on more than 850 goods, ranging from frozen pork to semiconductors from Jan 1, in order to improve its flagging economy.

Notably, the Trump administration had earlier called off a 15% tariff on nearly $160 billion worth of imports from China, including toys, smartphones, laptops and other electronics items. The U.S. government will also halve its 15% levy on $120 billion worth of Chinese import basket, leaving the tariff regime limited to 25% taxes on $250 billion and 7.5% on $120 billion per the “Phase One” deal.

With President Trump hinting to sign a formal agreement with his Chinese counterpart as early as January, the industry is primed to have sunny days ahead.

On the domestic front, the Senate passed the anti-robocall bill passed in the House earlier this month, paving the way for the President to formally sign it into a law. Dubbed the TRACED Act, for Telephone Robocall Abuse Criminal Enforcement and Deterrence, the bill mandates telecom firms to offer free call-blocking apps to thwart spam calls. The bill gives the FCC (Federal Communications Commission) adequate time to fine robocallers and lets the agency fine offenders without warning them first. The bill also aims to be a long-term deterrent by empowering the agency to work with the Justice Department to penalize criminals.

Furthermore, the Senate passed the Broadband Deployment Accuracy and Technological Availability (DATA) Act that enables the FCC to collect more precise data from wired, fixed wireless, and satellite broadband providers to get a better understanding of the nationwide broadband coverage. This is likely to bridge the urban-rural digital divide and foster the development of high-speed Internet connectivity across the country.

Regarding company-specific news, strategic deal, acquisition, earnings and network upgrade took the center stage over the past five trading days.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Recap of the Week’s Most Important Stories

1. Ericsson (BS:ERICAs) (NASDAQ:ERIC) has joined forces with Microsoft (NASDAQ:MSFT) to deliver a comprehensive connected vehicle platform at scale to the market. The Swedish firm is developing its Connected Vehicle Cloud in conjunction with the Microsoft Connected Vehicle Platform.

The combined solution will facilitate automakers to deploy vehicle services like fleet management, over-the-air software updates and connected safety services conveniently while minimizing expenses. Markedly, Ericsson’s Connected Vehicle Cloud connects more than 4 million vehicles across 180 countries, accounting for almost 10% of the world’s connected vehicle market. The platform has been modified to meet car makers’ growing demand for scalability and flexibility alongside connected vehicle service. (Read more: Zacks Investment Research

Written By: Zacks Investment Research