HomeBusinessWhy Apple has little to do with these two rocking telecom stocks

Why Apple has little to do with these two rocking telecom stocks

This is The Takeaway from today’s Morning Brief, that’s possible sign up to receive in your inbox every morning, along with:

You can’t give Apple (AAPL) all the credit for rising stock prices this year ahead of AT&T (T) and T-Mobile (TMUS).

I would actually argue that Apple doesn’t deserve any credit. Sorry, not sorry, Tim Cook!

Who deserves the honor? The top of every company that has focused on running more beastly telecom activities. I’m talking about a maniacal focus on profit margins, generating free cash flow and expanding potentially lucrative opportunities. And in turn, there hasn’t been any focus on doing stupid things with shareholder money, like expanding into the media sector.

First in this analytical analysis is Dallas, Texas-based AT&T, led by company veteran John Stankey.

At an investor day this week, Stankey used his signature deep voice (see video above) to outline more than $40 billion to be returned to shareholders over the next three years through stock buybacks and dividends. What really caught my attention were expectations for double-digit earnings growth by 2027.

You can’t normally hear AT&T and double-digit earnings growth in the same sentence.

Executives are betting that investments in 5G infrastructure and fiber will deliver a faster pace of revenue and profit growth than in 2024.

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For Stankey, the year-end investor day marked the end of his ongoing efforts to simply become a telecom giant again.

In April 2022, AT&T closed the deal to spin off its WarnerMedia division, which it had purchased for a whopping $85 billion just three years earlier. The move combined WarnerMedia’s HBO and CNN with Discovery’s HGTV, Animal Planet, Food Network and TLC.

The deal was an unmitigated disaster for CEO David Zaslav, who heads current Warner Bros. Discovery (WBD).

Since the spinoff, AT&T has focused on reducing debt, partly due to its acquisition of WarnerMedia. In September, AT&T sold its majority stake in TV provider DirecTV to private equity firm TPG for $7.6 billion.

AT&T’s long-term debt now stands at $126 billion, down from more than $128 billion in 2022.

“I can say we’re back in growth mode,” Stankey told me of Yahoo Finance’s Market Domination. “I think we’re at the beginning of our success story, so I don’t think the mission is accomplished.”

Stankey added that he is optimistic about the Trump administration’s support for his company, especially if the tax cuts are extended.

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