Telecom Stock Roundup: Sprint Boosts Video Analytics, AT&T's Content Deal & More
Zacks Investment Research | Sep 05, 2019 08:23AM ET
In the past five trading days, telecom stocks initially witnessed a healthy uptrend followed by a relatively flat trajectory as the fresh round of Sino-U.S. tariffs became effective Sep 1. Tense geopolitical scenarios and challenging global macroeconomic environment partially dented the momentum, although news of a ‘face-to-face’ meeting between the negotiators of the two sides in October aimed to defuse some of the undercurrents and propelled the stocks higher at the later stages of the past week.
The Trump administration went ahead with its proposed set of tariffs beginning this month and imposed 15% tariffs on $100 billion worth of imports from China. The latest import basket included mostly consumer goods like food, apparel, footwear and consumer electronics. Notably, the U.S. government had earlier decided to impose 10% tariff (which was later increased to 15%) on $300 billion of Chinese imports from September before Trump opted to delay taxing about 60% of the items from the list until Dec 15. These included cellphones, video game consoles, computer monitors, some clothing and footwear items. The strategic decision was aimed to offer some respite to the retailers and enable them to stockpile things for the back-to-school and holiday season. The short-term reprieve also offered U.S. telecom firms an opportunity to re-draw their supply chain mechanism and reduce dependency on Huawei to avert a possible future backlash.
In response, China imposed 5-10% retaliatory tariffs only on one-third of the proposed 5,000 U.S. items worth $75 billion, leaving the door ajar for negotiations. Subsequent communications across various diplomatic channels bore fruit and the two countries have agreed to hold meeting in October, before creating a conducive atmosphere for favorable trade discussions. However, in a visible shift from his earlier stance, the U.S. President has made it clear that the talks would not focus on the blacklisting of Huawei as it was deemed to be an issue of national security. The Trump administration is also supposedly sitting on about 130 applications received by the Commerce Department for issue of licenses for the trade of U.S. goods with Huawei. With no progress yet made to break the trade embargo on Huawei, the bonhomie is likely to be put to test once the two sides sit across the negotiation table.
Meanwhile, market uncertainty regarding the geopolitical turmoil in the United Kingdom related to Brexit, soft manufacturing spending in Japan and tepid GDP growth in China triggered by low factory output and high unemployment has led to intense market volatility across the globe. The U.S. manufacturing activity also contracted for the first time since early 2016 and together with a low second-quarter GDP growth estimate of 2%, following 3.1% growth in the first quarter, rendered a relatively grim picture for the future. Consequently, the stakes are relatively high for both the countries to arrive at an agreeable solution – the sooner, the better.
Regarding company-specific news, product launches, technology upgrades and strategic collaborations primarily took the center stage over the past five trading days.
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1. Sprint Corporation (NYSE:S) has unveiled a state-of-the-art video analytics solution to facilitate business enterprises to make informed and timely decisions to avert any potential crisis and improve operational efficiency.
Dubbed Curiosity Smart Video Analytics, the product was developed in conjunction with technology partners Ericsson (BS:ERICAs) (NASDAQ:ERIC) and Hitachi Vantara — a data storage system provider and wholly owned subsidiary of Hitachi Ltd. Leveraging AI and IoT, this highly adaptable solution delivers automated alerts and advanced video analytics technology to redefine the critical security operations of diverse business entities. (Read more: Zacks Investment Research
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