The Zacks Analyst Blog Highlights: Verizon Communications, Clearwire, Sprint Nextel, AT&T and Rio Tinto

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Apr 18, 2013, 09:30 ET

CHICAGO, April 18, 2013 /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), Clearwire Corporation (Nasdaq:CLWR), Sprint Nextel Corp. (NYSE:S), AT&T, Inc. (NYSE:T) and Rio Tinto Plc. (NYSE:RIO).

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Here are highlights from Wednesday's Analyst Blog:

Verizon Eyes Clearwire Airwaves

Verizon Wireless, a unit of Verizon Communications Inc. (NYSE:VZ) reportedly has plans to acquire airwave licenses for major cities in the U.S. from Clearwire Corporation (Nasdaq:CLWR). On Apr 8, Verizon made an offer of approximately $1 billion to $1.5 billion, excluding the present value of airwaves leased. We believe the odds against this deal remains much higher given the intervention of Sprint Nextel Corp. (NYSE:S), which is a major shareholder in Clearwire and proposes to acquire the latter.

However, if Verizon acquires these airwaves from Clearwire it would add to the company's current network expansion plans. The company is trying to enhance its existing network capabilities to offer uninterrupted wireless experience to its customers. In this context, the company is working over spectrum acquisition that can support expansion plans in data services.

The company has already received approval from the Federal Communications Commission (FCC) to buy wireless spectrum from Spectrum Co., which is a joint venture between Comcast Corporation, Time Warner Cable Inc. and Bright House Networks in Aug 2012. The deal is priced at $3.9 billion.

To raise funds for this transaction, Verizon struck a deal with AT&T, Inc. (NYSE: T) to sell 39 lower 700 megahertz (MHz) licenses to the latter. In exchange, Verizon will receive $1.9 billion and Advanced Wireless Services (AWS) spectrum licenses in five markets.

Additionally, Verizon planned the sale of three separate 700MHz spectrum blocks to small rural telecommunication firms. We believe the sale of lower spectrum assets and the consequent purchase of new AWS spectrum will work in favor of Verizon. The AWS spectrum holdings will double Verizon's capacity as well as enable services at a much higher speed and expedite the LTE rollout, thereby driving data revenues and boosting its competitive position.

RIO Witnesses Enhanced Volume

Mining giantRio Tinto Plc. (NYSE:RIO) reported improved first-quarter 2013 production data on Apr 16. Despite seasonal instability over the last year resulting especially from cyclones, this processor of mineral resources was able to operate well enough to deliver better production.

Rio saw a year-over-year increase in production across most of its business segments including aluminium, bauxite, thermal coal, mined coal, iron ore, uranium and salt. However, products like alumina, diamonds and gold experienced a year-over-year decline.

Rio's iron ore shipments increased 7.0% year over year, whereas iron ore production moved up 4.0% in the quarter ending March 2013. This was due to de-bottlenecking and productivity improvements in the company's Australian operations, Pilbara, which helped Rio overcome the disruptions caused by the cyclones.

Also, Rio's initiative to increase the Pilbara production capacity to 290 million tonnes per year seems to be in a positive direction, and it expects to produce the estimated yield in the third quarter of 2013.

Kennecott Utah Copper mine significantly increased its copper production in the quarter, compared with the year-ago quarter. However, the wall slide experienced at the Kennecott Utah Copper's Bingham Canyon Mine has turned out to be a major hindrance to its future production expectations. In view of the same, Rio has reduced the mine's expected mined copper production by 125,000 tons to 540,000 tons in 2013. Likewise, the expected production for refined copper is also reduced by 100,000 tons to 205,000 tons in 2013.

Rio has a number of projects which are currently either underway or have recently started operations. These projects are scattered over regions such as Canada, Namibia, Australia, USA, Chile and Uzbekistan, to name a few. We expect Rio to increase its production in the coming quarters through the completion of its planned strategic moves.

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