AT&T supports Apple, tower stocks under pressure … 5 things to know today
1. Analysts are starting to downgrade some of the biggest names in wireless as the U.S. stock market continues to trend downward, This week Wells Fargo downgraded the tower stocks, saying that carrier spending could be weaker than expected this year. Analyst Jennifer Fritzsche noted that the current “growing pains” will be temporary for the tower companies, but she does not expect these stocks to outperform the market in the short term.
AT&T is of course a major customer for all the large tower companies, and reports of the carrier’s activity are mixed. The company redirected spending in 2015 as it focused on the acquisitions of DirecTV, Iusacell and Nextel Mexico. Now AT&T is preparing for the 600 MHz spectrum auctions, and the capital that it is devoting to its infrastructure is spread between wireless, wireline and potentially satellite investments.
“Our sense is AT&T (a top 2 customer for every tower company) has still not yet turned on the wireless spending faucet (more of T’s focus and capital seem directed toward fiber),” Fritzsche wrote in a research note. She said that the timing for AT&T’s wireless spending remains an unknown and nothing she has heard in the last week suggests that it will pick up before the second half of this year.
Also this week, the analysts at Raymond James issued a sell rating on Nokia. Nokia has recently completed its $16.6 billion takeover of Alcatel-Lucent. Analysts are saying that an uncertain outlook for wireless spending may put pressure on the stock.
2. AT&T has filed a brief supporting Apple in the iPhone maker’s battle with the FBI. The carrier said Congress, not the courts, should decide the case. AT&T said that the issues of national security and personal privacy are too important to be decided on an ad hoc basis by various courts.
AT&T is one of several major companies speaking out in support of Apple. The list includes Verizon Communications, Microsoft, Google, Facebook and even Apple’s archrival Samsung.
3. China’s Baicells said it has introduced the world’s first small to use license assisted access (LAA). Unlike LTE in unlicensed spectrum (LTE-U), LAA combines both licensed and unlicensed spectrum by using one for the uplink and the other for downlink. Baicells said that its small cells will not interfere with Wi-Fi access points. The solution uses Intel’s Transcede system-on-chip, and Baicells and Intel showcased the small cell at Mobile World Congress.
4. Yahoo’s chief financial officer said the company is open to selling $1 billion to $3 billion worth of patents, property and other non-core assets. The company is under pressure to maximize shareholder value through several strategies, including asset sales. Verizon CEO Lowell McAdam has said Verizon might look at buying Yahoo if the price were right.
5. Demand for network equipment chips will offset slowing demand for smartphone chips, according to a leading chipmaker. Singapore’s Avago, which purchased Broadcom last year, has now adopted Broadcom as its new name. The name change makes sense for Avago, since most of its revenue now comes from the California chipmaker formerly known as Broadcom. The company hopes to see stronger demand for network components offset a slumping smartphone market, but nonetheless it plans to lay off almost 2,000 people as it consolidates operations.
