Who Is Benefiting The Most From 4G LTE Technology?

Includes: NOK, S, T, VOD, VZ
by: IncomeHunter

The 4G LTE wireless networks are becoming more and more common across the country, with certain tech stocks taking the opportunity to benefit substantially from the situation. Verizon Communications (NYSE:VZ) has been able to use 4G products to compliment its advancements in other areas. Sprint Nextel Corporation (NYSE:S) should be on the verge of another decent quarter, and advancements in LTE tech is helping certainly. AT&T Inc. (NYSE:T) has had a stellar year and movements in this technology has helped provide analyst upgrades to revenue and EPS numbers. Lastly, Alcatel-Lucent (ALU) is making large investments in 4G technology, and hoping that this can pull it out from the red, as it is expected to post yet another quarter of loss. It needs some good news to say the least.

Verizon has been carefully extending its reach in the tech market by providing 4G technology to as many people as possible. The company announced its intention to bring "the nation's largest 4G Long-Term Evolution (LTE) network to Columbus, GA". This is a significant step for the company, as it represents a huge technological step forward in this particular domain of the tech industry. Verizon's competitors will have a lot of catching up to do if they are to compete in a meaningful manner with the LTE giant. But things are looking up for Verizon. Although most analysts have tagged it for with a "neutral" rating, its EPS target has been upgraded by $0.10. Moreover, if it can bring up its LTE network, it will play a nice compliment to the revenue-boosting FiOS network that it has built - which has reached a mark of 17 million premises. This brought its operating revenues to $9.9 billion in the second quarter.

LTE, or long-term evolution, technology is the future when it comes to high speed data communications. Sprint seems well aware of the trend and has thus launched its own 4G LTE network commercially. This signals a move on Sprint's part to try to catch up with Verizon, as well as AT&T (another major player in the 4G LTE market), but it still has a long way to go. That's not to say it's out of contention, though. Some think that Sprint's stock could leap by 20% as a result of this, and I am inclined to agree. The last month saw an increase in the stock of about 13.5%, and I feel that this is a clear indication of the direction the stock - which is currently trading at approximately $5 per share - is heading.

AT&T is serious about making its presence felt in terms of 4G LTE technology. It is adding more and more 4G LTE markets to its portfolio, but at this point in time it is still way behind Verizon and has a long way to go before it will be able to catch up with the much larger company. In total, the company now has a presence in no less than 47 separate LTE markets across the country. And the company plans to keep on expanding its LTE markets until the end of next year. This will suit the company well, especially as some competitors, like Vodafone (NASDAQ:VOD) continue to lose customers in the thousands.

AT&T has seen a great year for its stock price. Analysts continue to raise price targets for it, and with the announcement of its 2Q numbers, AT&T should establish another quarter of growth. Operating and profit margins are back above 0%, after sinking below at the end of 2011. Analysts estimate that AT&T will post a $2.37 earnings per share by the end of 2012, a strong showing from the tech company.

Alcatel Lucent plans to work with C Spire Wireless in order to "build and deploy the initial phase of its 4G LTE high-speed mobile broadband network". To be more specific, Alcatel plans to invest something in the region of $60 million in about 20 LTE markets across Mississippi. Alcatel Lucent is one of the leaders in the communications industry and this partnership with C Spire should make a significant difference in terms of its customer base. However, since the news was announced, the company's stock price has declined by a little less than 10%, indicating that everyone may not agree with the partnership's potential. More likely, though, is that the decline is due to Alcatel's announcement that it not only miss its price target for 2Q, but that it will (once again) post an operating loss. The company blames slow demand, so perhaps the the C Spire investment will help out. My guess is that it will be too little too late, especially as telecoms have proven that the "high-performance gear" Alcatel produces is not a priority.

Everything considered, 4G LTE technology won't be a saving grace for any company, though Alcatel Lucent probably wishes that were so. Instead, it will serve as a solid compliment to other business operations, which says to me that Verizon is playing things just right. Though, for now AT&T remains the best buy of the bunch. The second half of 2012 should be solid for these companies, as new releases in mobile technology should boost revenue, and 4G LTE technology will maintain a strong presence, backing up the new product lines.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.