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Communication Services Cures Stock Market Cold

21 may 2008 - News - Editor

There is a break in the slug fest. One bell-weather stock has reasonable results at long last. The fight is far from over. However, we have a moment to stagger to our corners.

AT&T Incorporated (NYSE: T) earnings have risen 22% during the Most Recent Quarter. Such news cools perspiring brows. We have hardly recovered from death-defying profit plunges at Citibank and Bank of America. Could it be time to move stocks from the Financial Sector to the Communication Services Industry?

We do not think so. The difference between good and bad results does not relate to a sector. Some Communication Services Industry stocks have not fared well. All regional banks do not suffer from sub-prime woes. Take a look at: A Stock on Which You Can Bank

Quarterly results depend on the quality of Business Management. How does this apply to the pleasing news from AT&T earlier this month? Firstly, AT&T is on track to shave 1.5% of its work force. That is a major productivity improvement target. Every company that wants to survive a recession must be able and willing to lay off surplus people.

Secondly, the management has nimbly shifted resources from the fixed-line business to wireless data, audio, and video transmissions. This is pure customer integration. No corporation should lose time in adapting to new customer preferences.

Finally, the company has concentrated on key national accounts. It has signed new and large-volume contracts with the likes of Shell and IBM. We can look forward to the next quarter being at least as good as the last one.

We end with even better news. There are other stocks of the AT&T genre. Asset write-downs may have investors on the mat. That should not prevent any of us from standing up and fighting the next round.

 


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