Nevertheless this begs a question as to whether the move its vital from stock perspective? We don't think so. AT&T is primarily known for its wireless business and offers mobile services to the U.S. customers along with its other big rivals Verizon and Sprint. While half of the company's value is associated with these services, only about 11% comes from business services. Therefore, while the move may be strategic, its value creation potential is limited for now.
(Chart created by using Trefis' app)
Another way to look at this is by comparing estimated values for AT&T and Akamai. While we estimate AT&T's value to be $225 billion, our estimates for Akamai stand at just about $6.6 billion despite it being the leader in content delivery business. This contrast further highlights why we don't think that offering CDN will move the needle for AT&T.
Our price estimate for AT&T's stock stands at $38, implying more than 25% premium to the market price.
- AT&T Content Delivery Network Enables Highly Secure, Fast, Reliable Web Experiences, PR Newswire, Jun 22 2011
Disclosure: No position