Customers may be upset by a recent move by AT&T (T) as we see below, and I would never suggest that this is inconsequential. There, however, appear to be more positive news stories for the company, and these should help AT&T reaffirm its position as a major wireless carrier that pays attention to customer service. When considering all the recent news about the company, I expect the AT&T stock to be moving slowly in a positive direction.
AT&T and Verizon (VZ) are receiving some criticism for refusing to honor a promotion for the Samsung Galaxy S III, which would give users 50GB of free cloud storage from Dropbox. This is a service that goes for roughly $10 per month, so there will certainly be customers that are upset by these companies. Some have speculated that AT&T and Verizon may both be working on their own cloud-storage services, which would explain why the companies opted out of this promotion. This move decreases customer satisfaction and may encourage some to choose other carriers of the phone instead. As a result of both these things, I expect this to have a negative effect on the AT&T and Verizon stock.
At the same time, AT&T is working hard to increase customer satisfaction. AT&T is continuing to move forward with its initiative to provide free Wi-Fi service in a variety of New York parks, as it is now "lighting up" Rucker Park. This has been a successful program for AT&T, and it has now begun providing free Wi-Fi service in twenty-two parks. It plans to expand that number to twenty-six over the next several months. This will improve customer satisfaction, especially in the New York area. Even outside the area, however, this presents an image of a company that cares. This should continue to have a positive impact on the company, and at the very least, it should help offset the negative publicity with its choice not to honor the Samsung Galaxy S III promotion.
AT&T is also continuing to offer new products that will give it an advantage. It is now carrying the affordable Pantech Swift, which has been noted for great functionality and its usefulness to people who text often and are connected with social media. It has also begun to offer the Samsung Exhilarate, which has exciting features that will appeal to the mobile gambling community. Like the Pantech Swift, this is also a product that is quite affordable. AT&T should soon be offering the Asus Padfone and Transformer Pad Infinity tablet as well. Previously, these Asus products have only been available to U.S. customers through a rather large import cost.
As AT&T continues to expand its number of products available, it will continue to gain a larger portion of the market as a wireless carrier. It also shows dedication to meeting the needs of a wide variety of customers. This will further offset the bad publicity surrounding the Samsung promotion, and continue to give the company strength in the future as well, especially if these products become bigger.
Verizon is also expanding in small ways, which will help it overcome its issues with the Samsung promotion as well. It will be offering 4G LTE coverage in two more counties in West Virginia, and it also plans to supply 65% of the state with high-speed wireless Internet by next year. In addition to this localized expansion, Verizon will now be selling Sony's (SNE) Android SmartWatch, an accessory for Android smartphones. Both of these are somewhat minor developments, but they show that Verizon is working in both small and large settings to meet the needs of its many customers. These kinds of efforts will help offset the bad press, but I do not think these are quite as significant as the moves by AT&T. As a result, I expect Verizon's stock to remain at a fairly consistent price.
One of AT&T's competitors may be growing in more significant ways. Sprint Nextel (S) will become the second company to offer Apple's (AAPL) iPhone through its "no-contract prepaid Virgin Mobile brand." The only other company doing this first will be Leap Wireless (LEAP), which will begin offering prepaid iPhones on June 22. Sprint will begin doing this next month. It is important to note that prepaid services are becoming increasingly popular in the industry, so Sprint is certainly making an important move with this. Leap's services, furthermore, will only be a portion of the U.S. market, while Sprint has a more nationwide presence. I expect good things for both these companies, but I anticipate that the larger increases will be in the Sprint stock.
Sprint is also in a news event that may initially concern investors in dealings with Clearwire (CLWR), but there seems to be little reason to actually worry. Sprint has given up its majority ownership in the company. Multiple other companies have sold their stake in Clearwire this year, so this may come as bad news for stockholders. Sprint and Clearwire intend to keep their working relationship unchanged, however, so this should not have a major impact on either company. Some may worry about this situation, but at the moment, there certainly seems to be no cause for concern. Investors should monitor this relationship, but if the companies have been truthful, there should be no significant changes.
As it is making a bigger move for expansion and has not yet gotten caught up in the bad press, I believe that Sprint would be the best wireless carrier to back at the moment. I do not think AT&T is a bad stock either, however, especially with its many moves that should help counteract the bad publicity related to the Samsung Galaxy S III promotion. Its efforts to continue increasing its available products and providing free Wi-Fi in New York parks should help the AT&T stock go up in the near future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
