The Zacks Analyst Blog Highlights: Verizon Communications, AT&T, SK Telecom, Goodyear Tire & Rubber and Cooper Tire & Rubber

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Sep 14, 2012, 09:30 ET

CHICAGO, Sept. 14, 2012 /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 Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), SK Telecom Co. Ltd. (NYSE:SKM), Goodyear Tire & Rubber Company (NYSE:GT) and Cooper Tire & Rubber Co. (NYSE:CTB).

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Here are highlights from Thursday's Analyst Blog:

LTE Thriving Globally

The recent data on LTE network by Global mobile Suppliers Association (GSA) proves that with the increasing adaptation of LTE 4G technologies, the global telecom industry is about to enter into a new era of communication.

As per the data provided by GSA, 68 carriers spread across 46 countries have launched commercial LTE service in the last 12 months, bringing the global total to 96. Out of the 96 operating network, only 11 are based on TD-LTE technology. The carriers expect to have 152 commercial LTE services in 65 countries by the year end, indicating an expected growth of more than 50% over the next quarter.

Their prediction is based on the fact that 292 telecom carriers spread across 93 countries have promised to launch LTE services in the future while another 55 operators in 11 countries are in the initial stage of negotiation to launch LTE services. The commercial launch of LTE network started in 2009, when only 2 networks were launched. Since then LTE network has expanded by leaps and bounds clocking a very impressive annual growth.

The rising demand of LTE services is buoyed by its advantages over other 4G technologies like WiMAX, Ultra mobile Broadband and Multi-input Multi-output (MIMO) wireless LAN. LTE offers advantages like spectral efficiencies, lower costs, and superior integration ability with other open wireless standards.

In addition to these, LTE provides upload and download rates of 100Mbit/s and 50Mbit/s respectively with RAN (radio access network) round-trip times of less than 10ms. Ability to expand capacity and increase speed is the primary reason for its wide acceptability within the wireless segment.

Higher proliferation of smartphones and tablets coupled with increased games, HD-movie downloads is putting huge pressure on networks, resulting in slower network speed. Therefore, in a bid to boost its network speed and retain its customer base from other competitive carriers worldwide are trying to speed up their LTE network deployment.

In an effort to support the growing demand of LTE services, telecom carriers like Verizon Communications Inc. (NYSE:VZ) have expanded their reach across 370 markets in the U.S. and have vowed a nationwide expansion by mid 2013. In one of its close contender AT&T Inc. (NYSE:T), at present, LTE service is available in 60 markets and expects to reach 100 by the end of the year.

However, in Asia, South Korea's SK Telecom Co. Ltd. (NYSE:SKM) plans to launch an advanced LTE network by 2013 while in India the largest carrier Bharti Airtel Ltd. became the first operator to launch the service in India.

While LTE spectrum auction is already over in Brazil and Chile it is yet to take place in countries like Argentina and Columbia. According to Informa Telecoms and Media, over 60% of Latin American operators plan to launch LTE service in the next 2 years and could reach a customer base of 230,000 by the end of 2012.

Informa Telecoms and Media also suggest that some of the African countries like Angola, Namibia and Mauritius have tipped their European counterparts like UK, France and Italy in launching commercial LTE services and forecasts a LTE customer base of 350,000 by the end of 2012.

According to the GSA report, 48 LTE-based devices have been launched in the last six months, increasing about 6 times, which indicates that the demand for LTE service will gain momentum in forthcoming years.

Goodyear to Reduce Headcount

Goodyear Tire & Rubber Company (NYSE:GT) is dismissing 55 hourly workers based in its Danville, Virginia plant, according to sources. The layoffs will be effective from September 29 in the plant, which provides employment to about 2,300 workers.

The company is also adjusting production schedule at its Gadsden plant by implementing a two–week reduction in schedule this month. The two week period starts on September 29 and culminates on October 14. Goodyear has adopted this strategy to balance supply and demand of its products.

In August, the company's plant in Fayetteville, North Carolina, stopped operation for a week. The move was intended to adjust the inventories.

Goodyear, in the second quarter of 2012, saw a 12% decline in its earnings (excluding special items) to 57 cents per share from 65 cents in the prior-year quarter. The results, however, exceeded the Zacks Consensus Estimate of 46 cents. The year-over-year fall was due to lower tire volumes, impacted by the ongoing macroeconomic uncertainty across the globe.

Revenues fell 8% year over year to $5.2 billion, missing the Zacks Consensus Estimate of $5.7 billion. The decline was driven by weak economic conditions and unfavorable foreign currency translation.

Goodyear Tire & Rubber Company is one of the largest tire manufacturing companies worldwide, selling its products under the Goodyear, Kelly, Dunlop, Fulda, Debica, Sava and various other "house" brand names as well as private-label brands. The company, on a worldwide basis, competes with Bridgestone of Japan and Michelin of France along with other major competitors including Cooper Tire & Rubber Co. (NYSE:CTB).

The company is focused on the twin goals of top-line growth and cost reduction. However, it faces pricing pressure from OEMs and sluggish growth in the global tire industry.

Currently, Goodyear retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term (more than 6 months) Neutral recommendation on the stock.

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