While some telecommunications firms are languishing in misfortune, some prudent companies are using the economic downturn as a sign to adapt and hopefully elevate their shares along with related exchange traded funds (ETFs).
Despite a global recession, AT&T (T) has opted to spend $1 billion in expanding its global network, which would add greater capacity for businesses in the U.S. and overseas, reports Jeff Meisner for E-Commerce Times. It has put more than $3 billion into its network since 2006.
The network expansion will focus on Asian markets like China, India, the Philippines, Thailand and Malaysia. North American networks will also be boosted in Mexico and Puerto Rico.
While AT&T is looking optimistic, Sprint Nextel Corp. (S) reported a $1.6 billion fourth-quarter loss. Losing 1.3 million customers probably didn’t help much, and it laid off 8,000 workers, writes Antonio Perez for The Epoch Times. In the past year, Sprint lost 4.5 million subscribers; whereas, AT&T gained 2.1 million customers.
Sprint’s losses are said to be the effect of business downsizing where the number of active contracts will likely decline. Layoffs have also harmed its wireless mobile broadband market. The cause for hope is their new line of mobile phones that are set to come out later this year.
- HOLDRS Merrill Lynch Telecom (TTH): down 8.0% in the last month; 9.3% in the last three months; holdings in AT&T, 57.8%; Sprint is 1.2%
- iShares Dow Jones U.S. Telecommunications Index (IYZ): down 4.4% in the last month; up 4.8% in the last three months; AT&T is 23.1%; Sprint is 4.8%
- Vanguard Telecom (VOX): down 4.5% in the last month; up 4.7% in the last three months AT&T is 20.0%; Sprint is 4.0%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.