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The U.S. telecom stocks witnessed a flat trajectory over the past week as the industry awaited the infusion of fresh funds to revitalize the economy amid a faltering job market. Although the broader markets have mostly moved up in anticipation that the Congress will approve President Biden’s proposed $1.9 trillion stimulus bill, the telecom industry has remained overtly cautious due to lack of clarity over essential policy guidelines. The transitionary phase of the newly formed government has added to the woes as several of the key administrative officials are yet to assume office.
Although early comments by the members of the Biden administration made it clear that federal laws will work in unison with other agencies to eliminate threats from China-based telecommunication firms like Huawei and ZTE, the new government is yet to complete a comprehensive review process of likely threats posed by firms like TikTok. Consequently, the U.S. Justice Department asked the federal courts to put on hold the ongoing proceedings against restrictions imposed on TikTok by former President Donald Trump. Meanwhile, Huawei has filed a lawsuit against Federal Communications Commission ruling that designated it as a national security threat. The strategic move aims to test the political waters with the change in guards and sought an “open approach” from the new President after being battered by an array of sanctions by his predecessor.
In another notable incident, former Google CEO Eric Schmidt has urged the politicians to take proactive actions to speed up infrastructure investments in order to capitalize on 5G spectrum available from the C-Band auction. He also called on the policy makers to explore ways to incentivize rapid rollouts so that excess auction costs do not slow down 5G deployments and raise service costs for customers. Such resolute steps seem to be the call of the hour as China has reportedly moved ahead of the United States in the 5G race and further aimed to leapfrog it in the war for 6G dominance.
Regarding company-specific news, quarterly results primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Motorola Solutions, Inc. (MSI - Free Report) reported relatively modest fourth-quarter 2020 results, driven by diligent execution of operational plans. Despite surpassing the respective Zacks Consensus Estimate, revenues and adjusted earnings decreased year over year due to coronavirus-induced adversities.
Excluding non-recurring items, non-GAAP earnings in the quarter were $2.86 per share compared with $2.94 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents. Quarterly net sales fell 4.4% year over year to $2,273 million due to lower demand in the Americas and the International business owing to the continued downturn in business led by the virus outbreak. The top line, however, exceeded the Zacks Consensus Estimate of $2,239 million.
2. T-Mobile US, Inc. (TMUS - Free Report) reported solid fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate. The wireless carrier recorded industry-leading total net additions, postpaid net additions and postpaid phone net additions.
Quarterly adjusted EPS came in at $1.03, beating the Zacks Consensus Estimate by 52 cents, with the earnings surprise being 102%. Quarterly total revenues soared 71.2% year over year to $20,341 million, driven by the Sprint merger and customer growth. The top line surpassed the consensus estimate of $19,966 million.
Quarterly non-IFRS profit came in at €811 million ($967.1 million) or €0.14 (17 cents) per share compared with €821 million or €0.15 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents, delivering a surprise of 41.7%. Quarterly non-IFRS net sales were €6,569 million ($7,833.7 million) compared with €6,903 million in the prior-year quarter. The top line surpassed the consensus estimate of $7,556 million.
Quarterly non-GAAP net income came in at $35.6 million or 72 cents per share compared with $18.1 million or 41 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents. Quarterly revenues totaled $155.1 million compared with $120.6 million in the year-ago quarter. The improvement was driven by strength in memory and Radio Frequency communications for the 5G handset ramp and the acceptance of the company’s new products. The top line surpassed the consensus estimate of $150 million.
Non-GAAP net income came in at $159 million or $2.53 per share compared with $91.4 million or $1.40 per share in the year-ago quarter. Quarterly revenues increased 55.5% year over year to a record $479.4 million, primarily driven by an increase in direct sales through the company’s webstores. The top line surpassed the consensus estimate of $414 million.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, Juniper has been the best performer with its stock gaining 4.4%, while Qualcomm was the biggest decliner with its stock falling 11.5%.
Over the past six months, Arista has been the best performer with its stock appreciating 32.1%, while Verizon was the biggest decliner with its stock falling 6.6%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.9% on average while the S&P 500 has gained 17.2%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the earnings season unfurls for the remaining companies within the sector.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
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Telecom Stock Roundup: Motorola, T-Mobile Surpass Q4 Earnings Estimates & More
The U.S. telecom stocks witnessed a flat trajectory over the past week as the industry awaited the infusion of fresh funds to revitalize the economy amid a faltering job market. Although the broader markets have mostly moved up in anticipation that the Congress will approve President Biden’s proposed $1.9 trillion stimulus bill, the telecom industry has remained overtly cautious due to lack of clarity over essential policy guidelines. The transitionary phase of the newly formed government has added to the woes as several of the key administrative officials are yet to assume office.
Although early comments by the members of the Biden administration made it clear that federal laws will work in unison with other agencies to eliminate threats from China-based telecommunication firms like Huawei and ZTE, the new government is yet to complete a comprehensive review process of likely threats posed by firms like TikTok. Consequently, the U.S. Justice Department asked the federal courts to put on hold the ongoing proceedings against restrictions imposed on TikTok by former President Donald Trump. Meanwhile, Huawei has filed a lawsuit against Federal Communications Commission ruling that designated it as a national security threat. The strategic move aims to test the political waters with the change in guards and sought an “open approach” from the new President after being battered by an array of sanctions by his predecessor.
In another notable incident, former Google CEO Eric Schmidt has urged the politicians to take proactive actions to speed up infrastructure investments in order to capitalize on 5G spectrum available from the C-Band auction. He also called on the policy makers to explore ways to incentivize rapid rollouts so that excess auction costs do not slow down 5G deployments and raise service costs for customers. Such resolute steps seem to be the call of the hour as China has reportedly moved ahead of the United States in the 5G race and further aimed to leapfrog it in the war for 6G dominance.
Regarding company-specific news, quarterly results primarily took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Motorola Solutions, Inc. (MSI - Free Report) reported relatively modest fourth-quarter 2020 results, driven by diligent execution of operational plans. Despite surpassing the respective Zacks Consensus Estimate, revenues and adjusted earnings decreased year over year due to coronavirus-induced adversities.
Excluding non-recurring items, non-GAAP earnings in the quarter were $2.86 per share compared with $2.94 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents. Quarterly net sales fell 4.4% year over year to $2,273 million due to lower demand in the Americas and the International business owing to the continued downturn in business led by the virus outbreak. The top line, however, exceeded the Zacks Consensus Estimate of $2,239 million.
2. T-Mobile US, Inc. (TMUS - Free Report) reported solid fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate. The wireless carrier recorded industry-leading total net additions, postpaid net additions and postpaid phone net additions.
Quarterly adjusted EPS came in at $1.03, beating the Zacks Consensus Estimate by 52 cents, with the earnings surprise being 102%. Quarterly total revenues soared 71.2% year over year to $20,341 million, driven by the Sprint merger and customer growth. The top line surpassed the consensus estimate of $19,966 million.
3. Nokia Corporation (NOK - Free Report) reported decent fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
Quarterly non-IFRS profit came in at €811 million ($967.1 million) or €0.14 (17 cents) per share compared with €821 million or €0.15 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 5 cents, delivering a surprise of 41.7%. Quarterly non-IFRS net sales were €6,569 million ($7,833.7 million) compared with €6,903 million in the prior-year quarter. The top line surpassed the consensus estimate of $7,556 million.
4. Onto Innovation Inc. (ONTO - Free Report) reported healthy fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
Quarterly non-GAAP net income came in at $35.6 million or 72 cents per share compared with $18.1 million or 41 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents. Quarterly revenues totaled $155.1 million compared with $120.6 million in the year-ago quarter. The improvement was driven by strength in memory and Radio Frequency communications for the 5G handset ramp and the acceptance of the company’s new products. The top line surpassed the consensus estimate of $150 million.
5. Ubiquiti Inc. (UI - Free Report) reported solid second-quarter fiscal 2021 results, wherein the top line beat the Zacks Consensus Estimate.
Non-GAAP net income came in at $159 million or $2.53 per share compared with $91.4 million or $1.40 per share in the year-ago quarter. Quarterly revenues increased 55.5% year over year to a record $479.4 million, primarily driven by an increase in direct sales through the company’s webstores. The top line surpassed the consensus estimate of $414 million.
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and the six months.
In the past five trading days, Juniper has been the best performer with its stock gaining 4.4%, while Qualcomm was the biggest decliner with its stock falling 11.5%.
Over the past six months, Arista has been the best performer with its stock appreciating 32.1%, while Verizon was the biggest decliner with its stock falling 6.6%.
Over the past six months, the Zacks Telecommunications Services industry declined 3.9% on average while the S&P 500 has gained 17.2%.
What’s Next in the Telecom Space?
In addition to the 5G deployments and product launches, all eyes will remain glued to how the earnings season unfurls for the remaining companies within the sector.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>