Is AT&T a Safe Investment?

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With shares of AT&T (NYSE:T) trading around $32, is T an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

AT&T is a provider of telecommunications services in the United States and worldwide. Services offered include wireless communications, local exchange services, and long-distance services. AT&T operates in four segments: Wireless, Wireline, Advertising Solutions, and Other. The communications products offered through AT&T’s segments reach audiences using just about every widely adopted medium: Internet, voice, television, and mobile. As consumers continue to adopt this technology, providers like AT&T stand to see rising profits.

AT&T sure seems to be trying hard to send Vodafone a message. This morning, the giant telco repeated a warning it first made late last week — that the window for a wireless deal in Europe may be closing. The company has been open about its interest in Europe, and people familiar with the matter say it has explored a bid for Vodafone. Reading between the lines, it appears AT&T may be angling to bring Vodafone to the table and condition its expectations about price. Vodafone’s investors seem to have understood the signal. Since last Thursday, when AT&T Chief Executive Randall Stephenson first sounded the warning that the “window may be closing,” Vodafone’s shares have fallen 7 percent.

AT&T CFO John Stephens repeated the warning today with added punctuation. “We still believe,” he said, referring to the case for investing in Europe. “But I think it’s important to note that things have changed.” Vodafone has been seen as a takeover target ever since CEO Vittorio Colao agreed to sell the company’s 45 percent stake in Verizon (NYSE:VZ) Wireless  to Verizon for $130 billion, a deal that closed last month. It’s now caught between being a possible seller and having to invest to build its own business.

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