Word is that AT&T (NYSE: T ) is going to be back in the business of hocking
high-end, exclusive smartphones again starting early next year. Kaufman Bros.
analyst Ben Abramovitz said in a Friday research note that Nokia (NYSE: NOK )
and Microsoft s (NASDAQ: MSFT ) debut collaboration the Lumia 800 smartphone
powered by the Windows Phone 7.5 operating system will arrive in the U.S. in
2012 using AT&Ts network as its window. A follow-up report in Forbes further
detailed Abramovitzs thoughts on the future of Windows phones, predicting, We
believe this poses a potential risk for Sprint (NYSE: S ) and its new long-term
commitment to Apple (NASDAQ: AAPL ). The thinking, then, is that Windows
smartphones are going to be popular with businessmen. Windows phones will
staunch the flood of iPhones and Google (NASDAQ: GOOG ) Android devices into the
business market with pocket devices using an extension of popular enterprise PC
technology. In the telecom race, this means AT&T might have a lock on the first
fashionable Windows phone powerhouse in Nokias Lumia. Since Sprint has hitched
its ship to Apple, the logic says it will miss the opportunity present in
Microsofts new rise. Abramovitzs logic is sound. After a year of speculation and
doomsaying about the Finnish phone maker and Microsofts partnership, the Lumia
is off to a promising start. Nokia shares sank hard last week , dipping 6% on
Tuesday after Pacific Crest analyst James Faucette lowered Lumia sales estimates
for the quarter to 500,000 phones but Nokia countered, claiming Lumia was its
biggest release in the U.K. in recent history. While skeptics might scoff,
France Telecom (NYSE: FTE ) subsidiary Orange, a mobile provider for the U.K.
that also is an iPhone carrier, said it received more preorders for the Lumia
than for any other Nokia phone in its history. Great for Nokia and Microsoft
then, and great for international telecoms in the U.K., India and the other
territories in which Lumia will release this year, racking up a potential 2
million in sales ( according to Deutsche Bank ) before the year is out.
Realistically speaking, though, will Lumia really be a game-changer for AT&T?
AT&Ts exclusive support of the iPhone was crucial to the companys growth. When
AT&T Wireless and Cingular became a single mobile operator in 2007, it was the
leading provider in the U.S. by the end of 2008 with a base of 70 million
subscribers. The popularity of Apples iPhone, then a luxury item, helped the
company maintain that lead until 2009 when Verizon overtook the company . And it
was the iPhone that helped AT&T maintain its competitive edge against Verizon
until 2011 when Apples phone moved on to Verizon, Sprint and other carriers.
Right now, AT&T could use a boost for its mobile operations. Subscriber growth
missed expectations in the third quarter , with just 319,000 new subscribers
signing up where analysts were projecting an average of 406,000. The company
also is about to lose a significant amount of capital following its botched
acquisition of T-Mobile USA a bungle that might cost the company $4 billion .
Whether Lumia can be that boost is difficult to predict. Consumers are nothing
if not fickle, and they might be wooed by a new gadget provided the price is
right and the subscriber incentives are appealing enough. Rumor is that
Microsoft is projecting it will sell 100 million phones worldwide in 2012. If
AT&T controls the flagship Windows phone in the U.S. and Microsoft meets those
lofty sales expectations, it could mean that AT&T sees appreciable subscriber
growth. But the smartphone market is a lot more crowded than it was in 2007, and
an exclusive device now simply means its more difficult to distinguish yourself
in the crowd. The mobile market is a game of joining them namely Apple and
Samsung (PINK: SSNLF ) rather than beating them. The long and short of it for
investors: Lumia wont change AT&Ts role in your portfolio. The company itself is
a glacial mainstay, and AT&Ts steady 6.2% dividend yield might change or might
not next year but if it does, it likely will hinge on T-Mobile news, not
Microsoft and Nokias new toy. For Nokia though, Lumia represents the first step
in what will prove to be an arduous recovery. The significant dip in Nokia
shares after analysts premature downgrade of Lumia sales estimates shows just
how skittish Wall Street is about the company. Even with 2 million Lumia sales
expected by Jan. 1, Nokia is going to need more to win back investor confidence.
As of this writing, Anthony John Agnello did not hold a position in any of the
aforementioned stocks. Follow him on Twitter at
No comments:
Post a Comment