The Zacks Analyst Blog Highlights: Best Buy Company, AT&T, Microsoft, Apple and Verizon Communication

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Sep 14, 2011, 09:30 ET

CHICAGO, Sept. 14, 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: Best Buy Company Inc. (NYSE: BBY), AT&T Inc. (NYSE: T), Microsoft (Nasdaq: MSFT), Apple Inc.'s (Nasdaq: AAPL) and Verizon Communication Inc. (NYSE: VZ).

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Here are highlights from Tuesday's Analyst Blog:

Best Buy Misses Estimate

Best Buy Company Inc. (NYSE: BBY), the leading specialty retailer of consumer electronic products, recently posted weaker-than-expected second-quarter 2012 results. The quarterly earnings of 47 cents a share missed the Zacks Consensus Estimate of 53 cents and plunged 21.7% from 60 cents earned in the prior-year quarter.

The Zacks Consensus Estimate inched down a penny prior to the earnings release with 6 of the 19 analysts covering the stock revising their estimates downwards over the last 7 days.

Management updated its fiscal 2012 adjusted earnings guidance range to $3.35 to $3.65 (including a positive impact of 20 cents to 25 cents a share from a share repurchases) from its earlier guidance range of $3.30 to $3.55 per share.

Gross profit came down 2% to $2,872 million, whereas gross margin contracted 40 basis points (bps) to 25.3%. Operating income slipped 30% to $287 million, whereas operating margin shriveled 110 bps to 2.5%.

Richfield, Minnesota-based Best Buy, said that total revenue remained almost flat at $11,347 million from the prior-year quarter. However, the company registered a fall of 2.8% in comparable-store sales versus a marginal decrease of 0.1% witnessed in the year-ago quarter.

The total revenue also came below of the Zacks Consensus Estimate of $11,442 million. For fiscal 2012, Best Buy stood by its earlier projection and expects revenue between $51 billion to $52.5 billion.

AT&T to Launch 4G Mango Devices

The second largest U.S. wireless provider AT&T Inc. (NYSE: T) intends to launch three new 4G phones from Samsung and HTC.

Focus S and Focus Flash from Samsung and HTC Titan are slated for a fourth quarter release. The handsets will operate on Microsoft (Nasdaq: MSFT) Windows Phone 7.5 Mango software.

Additionally, AT&T plans to upgrade its existing Windows Phone 7 devices to Mango this fall. This would make the company the first carrier to update its existing phones.

AT&T currently delivers 4G services using High-Speed Packet Access Plus (HSPA+) technology and plans to roll out Long-Term Evolution (LTE) technology by the end of 2011. Initially, LTE services will debut in five cities, namely Atlanta, Chicago, Dallas, Houston and San Antonio. AT&T expects to cover 10 more markets later on reaching approximately 70 million Americans by the year end. By 2013, AT&T intends to extend its 4G network to the entire American populace.

In its 2011 blueprint, AT&T also has the introduction of 20 4G devices, including a large collection of smartphones, tablets, modems and mobile hotspots, in order to maintain its leadership in the related market. The company intends to deliver an industry-leading Android portfolio, including more than 12 new devices.

We believe the network upgrades as well as introduction of new devices will keep the churn rate low with the addition of new subscribers. This would lead to strong wireless revenue growth.

Further, AT&T is expected to enhance its 4G technology mobile broadband services through spectrum licenses that will face intense competition from Apple Inc.'s (Nasdaq: AAPL) iPhone. AT&T lost its iPhone exclusivity in mid-February when its rival Verizon Communication Inc. (NYSE: VZ) marketed iPhone for the first time.

We are reiterating our long-term Neutral recommendation on AT&T. The stock retains the Zacks #3 (Hold) Rank for the short term.

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