Telecom Stock Roundup: Ericsson Q3 Earnings Miss, AT&T's Buyout & More
Zacks Investment Research | Oct 23, 2019 09:54PM ET
In the past five trading days, telecom stocks witnessed an uptrend as high-level trade officials from the United States and China remained busy working on the modalities of the “Phase One” deal. The partial trade accord is likely to ease the bilateral tensions between President Trump and his Chinese counterpart, who are expected to formally sign an agreement in mid-November. Although widespread expectations of improving market conditions from the preliminary trade deal have led to positive vibes within the industry, lower-than-expected earnings performance and relatively soft outlook from hitherto declared results have partially played a spoilsport.
Leveraging the bonhomie of the Sino-U.S. relations, leading Chinese telecom equipment manufacturer Huawei is reportedly in early talks with American firms to license its 5G technology. Although President Trump has eased some trade restrictions on Huawei, it still continues to be on the U.S. Commerce Department's Entity List, debarring the exclusive use of its networking equipment and components on national security grounds. In order to circumvent this, Huawei is aiming to offer either long-term licensing deals or one-time technology transfer for access to its 5G patents, licenses, code and manufacturing knowhow. This, in turn, would enable the prospective U.S. buyer firms to modify the source code and use it according to their requirements, thereby nullifying the threat of spying and data espionage by the communist nation.
The Department of Defense has revealed plans to issue a draft Request for Proposal in November for large-scale experimentation and prototyping of 5G technologies at four U.S. military installations. In addition to streamlined access to site spectrum bands, fiber and wireless infrastructure, the installation will provide the wherewithal to conduct controlled experimentation with dynamic spectrum sharing. This is likely to give an opportunity to the industry to employ new commercial technologies to enhance military capabilities, speed up 5G deployment and provide feedback before the final Request for Proposal is issued.
Regarding company-specific news, earnings, acquisition, strategic collaboration, footprint expansion, and product launch primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Ericsson (BS:ERICAs) (NASDAQ:ERIC) reported mixed third-quarter 2019 financial results, wherein the top line beat the Zacks Consensus Estimate but the bottom line missed the same.
Non-IFRS loss was SEK 1.80 (19 cents) per share against earnings of SEK 1.03 per share in the year-ago quarter. The bottom line compared unfavorably with the Zacks Consensus Estimate for earnings of 8 cents. Quarterly net sales increased 6.2% year over year to SEK 57,127 million ($5,956.1 million), primarily driven by strong growth in North America and North East Asia. The top line surpassed the consensus estimate of $5,903 million. (Read more: Original post
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