The Zacks Analyst Blog Highlights: AT&T, Verizon Communications, Apple and Toyota Motor

CHICAGO, May 12, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), Apple Inc. (Nasdaq: AAPL) and Toyota Motor Corp. (NYSE: TM).

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Here are highlights from Wednesday's Analyst Blog:

AT&T to Invest in Cloud Business

The second-largest U.S. mobile service provider AT&T Inc. (NYSE: T) plans to invest $1 billion in network-based cloud, mobility and network sourcing solutions in 2011.

Telecommunication carriers are rapidly entering the cloud computing business due to increased competition in the space and changing consumer habits. This will help operators to differentiate their products and services and pave the way for strategic alliances between telecom and IT companies.

AT&T will deploy the cloud computing services to businesses across the board, from small to big multinational companies. The company will cover government agencies and institutions as well as industries such as manufacturing, retail, health care, automotive and hospitality.

The billion-dollar investment is a chunk of the company's estimated $19 billion capital budget for 2011. AT&T showed keenness to invest in the cloud computing business after its largest rival Verizon Communications Inc. (NYSE: VZ) acquired information technology service company Terremark Worldwide Inc. (TMRK) last month.

In February, AT&T lost its exclusive hold on Apple Inc.'s (Nasdaq: AAPL) iPhone to Verizon. This resulted in only 3.6 million iPhones activations by AT&T in the recently concluded quarter. In order to make up for the subscribers lost to Verizon, AT&T announced its intention to acquire Deutsche Telekom unit, T-Mobile USA, for $39 billion in March. The entry into cloud computing is indicative of the company's efforts to remain competitive.

AT&T is also pursuing a number of strategies to tap opportunities in the wireless data market and currently operates the nation's fastest mobile broadband network. The company is aggressively deploying the high frequency 850 MHz band across its markets to boost its 3G network performance. AT&T currently delivers 4G services using High-Speed Packet Access Plus technology and plans to roll out Long-Term Evolution technology in mid 2011.

Although the AT&T/T-Mobile merger would lead to extensive growth in subscribers, revenues as well as profits, it is a time-taking process and might alter the structure of the overall telecommunication industry. We believe the inclusion of T-Mobile operations will position AT&T as the market leader in the U.S. wireless industry and further bolster its mobile broadband services, which are currently booming.

Additionally, the company is expanding its wireless and wireline businesses, which would in turn fuel profitability going forward. However, the completion of the T-Mobile and AT&T deal contains a number of risks.

Based on competitive pressure as well as a steep decline in its traditional fixed-line phone business, we are recommending a Neutral rating with the Zacks #3 (Hold) Rank on the stock.

Toyota Vrooms on Sales Promotion

Toyota Motor Corp. (NYSE: TM) posted a profit of Yen 408.18 billion ($5.07 billion) or Yen 130.16 ($1.60) per share for its fiscal 2011 ended March 31, 2011 that almost doubled from Yen 209.46 billion or Yen 66.79 per share a year ago.

The increase in profit was attributable to positive impact of Yen 490.0 billion due to marketing efforts and Yen 180.0 billion due to cost reduction measures, partially offset by a negative impact of Yen 110.0 billion due to the earthquake in Japan and Yen 290.0 billion due to unfavorable exchange rates.

Consolidated revenues in the fiscal year rose marginally by 0.23% to Yen 18.99 trillion ($235.80 billion) from Yen 18.95 trillion, driven by a growth in unit sales in Asia (28%) and Other regions (15%), offset partially by a decline in unit sales in Japan (11.5%), North America (3%) and Europe (7%). Total unit sales increased 0.98% to 7.31 million units during the fiscal year.

Toyota's total cost and expenses dipped 1.5% to Yen 18.53 trillion from Yen 18.80 trillion in the prior fiscal year. Operating income increased more than threefold to Yen 468.28 billion from Yen 147.52 billion in fiscal 2010 due to the same factors affecting the net income.

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