Telecom Stock Roundup: Will U.S. Restrictions On Chinese Firms Boomerang?
Zacks Investment Research | Apr 19, 2018 08:50AM ET
Over the last five trading days, telecom stocks were initially slow off the blocks but gradually picked up pace, as protective measures by the U.S. government seemed to propel the industry to gain an upper hand over its Chinese counterparts.
At a meeting held last week, the Federal Communications Commission (“FCC”) came up with a concrete date to auction licenses of high-band spectrum so that wireless networks could roll out 5G technology by the end of the year. The FCC voted unanimously to auction off licenses for the 28GHz spectrum on Nov 14, followed by another round for 24GHz spectrum soon after. The FCC expects to sell about 6,000 individual licenses for different chunks of spectrum in different geographic locations.
The FCC also voted unanimously to finalize a plan this year to prevent federally subsidized telecommunications carriers from using suppliers deemed to pose a risk to the U.S. national security. The decision takes a swipe at Chinese telecom companies like Huawei and ZTE and intensifies the murky trade war between the two superpowers. The strategic plan aims to thwart the U.S. companies to utilize the $8.5 billion FCC Universal Service Fund to procure goods or services from Chinese firms, limiting the latter’s ability to sell their products in the country.
Regarding company-specific news, the earnings season started off with ADTRAN Inc. (NASDAQ:ADTN) reporting results, while continued product launches for superior connectivity and high-quality content to subscribers at lower cost of ownership gained momentum over the last five trading days.
Recap of the Week’s Most Important Stories
1. ADTRAN reported lackluster first-quarter 2018 results with both the top line and bottom line missing the respective Zacks Consensus Estimate. Excluding non-recurring items, non-GAAP loss for the reported quarter was 29 cents per share against earnings of 18 cents in the year-earlier quarter and was wider than the Zacks Consensus Estimate of a loss of 15 cents.
Total revenues for the first quarter were $120.8 million compared with $170.3 million in the prior-year quarter. Also, the top line missed the Zacks Consensus Estimate of $126 million. The significant decline was primarily attributable to slowdown in the spending at a domestic Tier 1 customer (resulting in lower product volumes), high restructuring expenses and a merger-related review. (Read more: Original post
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