The technology sector is a rapidly growing area that has long provided high risk, high reward opportunities for investors. In this article, I will focus on five tech stocks that are taking big steps to increase profitability, which will likely boost their stock value. Alcatel-Lucent (ALU) has been focusing on expanding its high-speed broadband network in rural Texas through partnerships. CenturyLink (NYSE:CTL), meanwhile, has solidified a $233 million deal with the Social Security Administration (SSA). Similarly, Windstream (NASDAQ:WIN) has been boosting its profitability by focusing on saving clients money, while Frontier (NYSE:FTR) has been focusing on advertising. Verizon (NYSE:VZ) has also implemented new pricing structures for its FiOS internet service.
Alcatel-Lucent recently introduced a high-speed broadband connection in rural Texas, an area that has been seriously underserved in this regard up until now. This is the result of an agreement between Alcatel-Lucent and West Central Wireless, which is a "wholly-owned subsidiary of the Central Texas Telephone Cooperative." The agreement will allow residents of rural Texas to have access to fast broadband connections on their mobile devices. It is good for these residents, therefore, but it should also benefit Alcatel-Lucent. It may seem like a relatively small move, but it should have a great effect on the stock.
The agreement has two major components. Alcatel-Lucent will enable West Central Wireless to launch a new 4G LTE (Long Term Evolution) service that will provide broadband to the rural area of Texas. The agreement also states that Alcatel-Lucent must open its core network to allow other regional operators to have access to Texas. Clearly, this second component will have an even larger impact on the underserved communities in the state, as they will now have access to broadband services from a variety of different locations. West Central Wireless plans to introduce its own 4G LTE service for laptops later this year, but it will not introduce a similar service for mobile devices for a while yet.
A partnership with West Central Wireless is a good move. It is the strongest company when it comes to communications in Texas. It was one of the first cellular operators to make its mark on the state, and therefore, it has a significant client base already under its belt. Alcatel-Lucent will now be able to benefit from this client base and build on it for its own retail purposes. This is an excellent way for Alcatel-Lucent to make its presence known in the state.
This will certainly benefit Alcatel-Lucent, even if it is not the largest of moves, as it "demonstrates Alcatel-Lucent's ability to provide flexible solutions that meet operators' unique business needs and help them creatively expand their businesses." This is a good reputation to maintain, as it means that Alcatel-Lucent will continue to be the company that others turn to when major changes and expansions like this one occur.
I also feel that this is a wise move because there has been a large and marked increase in the demand for broadband services in homes. In addition, people want this service to be fast, cost-effective, and low on energy consumption. Alcatel-Lucent is rising to the challenge magnificently, and I feel that this is what will keep the company at the head of the pack.
CenturyLink is another company in the tech market that has no trouble staying ahead of the game. This is a company that we continually expect great things from, and it continues to deliver. For example, it recently inked a major deal with Social Security Administration for $233 million. This is the kind of significant deal that we like to see from CenturyLink. The company is constantly striving towards providing its investors with the best returns possible, and it is one of the few companies at the moment that can keep its finances in order. I expect great things from this stock, and it should be rising in the stock market as a result of its good moves.
Frontier will continue its profitable partnership with The Berry Company through 2014, so Frontier is also doing well. This is a wise move for Frontier, as this advertising business brings us FrontierPages, electronic Yellow Pages, and it is a good source of revenue. The two companies work together to provide advertising solutions for small and medium-sized businesses. Other services include search engine optimization, search engine marketing, and video marketing services. There will always be businesses that want to become better known in the market, so there will always be a stream of revenue for the partnership. This should help Frontier maintain a consistent price in the stock market.
Another competitor is also doing well. Pratt Industries has chosen Windstream to help it out with its communication problems. Its communication systems are outdated, and the call quality is far from perfect, so it is in need of help. Windstream will now be in charge of providing a customized managed Unified Communications service across the board. The project is a significant one for Windstream, as Pratt has 72 locations worldwide. In short, it is a big project that will generate revenue and investor return. With such a great deal, I think that Windstream stock will be on the rise for some time.
Another competitor has been surrounded by positive news as well. Verizon's new pricing structures for its FiOS Internet service may seem pricey at first glance, but you need to understand what it is you are paying for. The new tiered system that the company introduced has aimed at addressing the need for faster broadband connections, as domestic and home use of broadband increases significantly each year. While you may be paying more - about $205 a month - you will also have faster Internet, so the company is meeting a specific need that some customers have. In addition, it is not compulsory to use the new services, as the old packages and pricing structures are still in existence. This should only bring good things for Verizon stock.
While competitors are doing well, it is also clear that Alcatel-Lucent has the right idea about how to move forward. Internet and home service providers often do not realize how many untapped markets there are within the United States. Texas is one such market. By identifying a need in the area and then addressing that need, Alcatel-Lucent has now firmly established its presence in an area where no broadband provider has had a significant influence before. Reaching out to more consumers is a great strategy, as it has the power to increase the client base and thereby increase profits. As a result of this positive development, therefore, Alcatel-Lucent is in a strong position. If this transfers well to the stock, I think the stock should definitely be going up, both in the short term and in the long term.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.