AT&T, Apple, Google, Verizon Communications and Sprint Nextel

Chicago, IL - May 10, 2012 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Innovation analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include AT&T Inc., Apple Inc ., Google Inc., Verizon Communications Inc. and Sprint Nextel Corp..

Lower sales of Apple Inc .'s iPhone while the first quarter 2012 helped it to cut expenses that resulted in more profits nevertheless hurt subscriber growth to some extent. Furthermore, the outperformance was attributable to the healthy wireless and wireline businesses.

The Zacks Consensus Estimate

AT&T's first quarter adjusted revenues outpaced the Zacks Consensus Estimate and the year-ago revenues by 3 cents each. Revenue improved on continued 4G mobile broadband sales, strong wireless network performance and improved wireline revenue trends.

Wireless revenue advanced on the back of robust smartphone and branded computing device sales as then as lower post-paid churn. Rapid adoption of smartphones including Google Inc. 's Androids along with growth in tablets and connected devices just as automobile monitoring systems and security systems led to the growth in retail wireless subscribers.

The solid momentum for AT&T U-verse

Despite the solid momentum for AT&T U-verse and strategic services, Wireline revenue dipped on weakness in voice and legacy data products.

The bullish analysts see 2012 as a strong year with continued growth in revenue, revenues per share and free cash flow as so then as margin expansion. Continued strength in smartphone and branded computing device sales as then as rapid expansion of Long Term Evolution networks are fueling growth in the wireless business. AT&T is riding high on iPhones, Google's Androids also as LTE handsets, which are driving smartphone sales and have as well led to subscriber accretion and reduced churn.

The wireline segment

With respect to the wireline segment, the analysts expect positive business trends to continue going forward on the back of strong U-verse and business revenue, more exactly improving strategic services. This will aid wireline revenue to return to its growth curve and assure stable margins.

In a saturated wireless market, AT&T is looking at new avenues for growth just as home security and automation. The company is as well shedding some of its slower-growing assets or restructuring underperforming or non-strategic assets just as the directory business and rural access lines. Yesterday, AT&T sold its 53% stake in its Yellow Pages business to Cerberus Capital Management LP for $950 million.

Going forward, AT&T will continue to focus on its core wireless, IP, cloud and application-based services. The company is expanding in faster-growing markets just as mobile data and broadband through LTE (Long Term Evolution, latest standard in the mobile network technology), U-verse IPTV and advanced television offerings.

Nevertheless, some analysts are skeptical about the company's ability to manage the rising mobile data traffic amid stiff competition and limited wireless spectrum licenses. Just in case, AT&T is facing a potential setback in its wireline division in the East, Midwest, West and legacy should it fail to negotiate the new labor contract with them, which might negatively hurt the company's revenue and margins.

We expect AT&T's growth prospects to be strong driven by subscriber accretion, higher smartphone adoption, LTE mobile broadband network, iPhone sales, U-verse expansion and cloud computing business. Furthermore, a healthy balance sheet and strong commitment to shareholders' return make the stock more attractive for income-oriented investors.

However, persistent access line losses, competitive pressures from rivals Verizon Communications Inc. and Sprint Nextel Corp., and heavy iPhone subsidies might drag nearly-term margins and revenues.