Telecom Stock Roundup: Verizon-AT&T TV Strategies, Qualcomm's Patent Deal & More
Zacks Investment Research | Aug 21, 2019 09:53PM ET
In the past five trading days, telecom stocks witnessed a remarkable turnaround as the Trump administration allowed domestic firms to continue trade with Chinese telecom equipment manufacturer Huawei for 90 days. The strategic move harbored hopes of a progress in bilateral trade negotiations that went on a tailspin due to proposed tariffs and counter tariffs. The short-term reprieve also offered an opportunity to re-draw the supply chain mechanism and reduce dependency on Huawei to avert a possible future backlash. However, latent fears related to the execution of a mutually agreeable trade deal remained a potent threat that partially disrupted the uptrend near the end of the past week.
The U.S. Department of Commerce seemingly fired a double-barrel gun when it offered an extension to domestic firms to continue trade with Huawei till Nov 19 on one hand and added a fresh list of 46 Huawei affiliates to the Entity List on the other. These included global R&D and innovation centers of the Chinese telecom major as the U.S. government aimed to stifle the company from extending its market dominance as 5G deployments across the globe pick up pace. Meanwhile, the stop-gap arrangement provided a much-needed boost to the beleaguered industry that battled trade uncertainty with continued tariff war.
The Trump administration has also remained non-committal about the proposed tariffs that are likely to be effective Sep 1. Notably, the U.S. government had earlier decided to impose 10% tariff on $300 billion of Chinese imports from next month 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 that formed a sizeable portion of the consumer shopping basket. 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 two back-to-back rollbacks seem to hint that the U.S. consumers are feeling the tariff pinch, offering hopes of a possible patch-up at a later date.
Although the two warring countries are expected to resume their trade negotiations in September, tense undercurrents related to Huawei continued to linger. An escalation of the trade conflict is in the cards as the communist nation has threatened to deal fire with fire.
Regarding company-specific news, media strategies, patent deals, product launches and collaborations primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Leading telecom service providers Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) have embarked on divergent strategies for the local TV service to meet their corporate objectives. The purported moves seem to be the call of the hour as the battle for survival gets murkier with intense price competition and more content-driven options from Amazon.com (NASDAQ:AMZN), Hulu and Netflix (NASDAQ:NFLX).
Get The News You Want
Verizon has reportedly decided to wind up the operations of news channel Fios1 News, which is one of the two hyperlocal cable-news channels serving New York City’s metro area. AT&T has rolled out a service for television viewers to attract more consumers who are lured by the rich video content of avant-garde media firms. (Read more: Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.