Buzzfans, today I am going to kick of a new category in my blog called Markets. Here I will discuss stocks and other market-related activities. To inaugurate this category, I decided to feature a stock that may be poised to ride (or should I say..is riding) the iPhone hype. Drumroll, it is at&t (NYSE: T - 40.24), and its no longer your grandfather’s company. I won’t bore you with company financials or the like (you can look that up here).
Basically, at&t has the potential to attract many customers (both new and from other carriers) who want the “latest and greatest†gadget since the Sony Walkman, regardless of price ($499 - $599). At&t Inc. Chief Executive Officer Randall Stephenson said 40 percent of the people who requested information on Apple Inc.’s iPhone aren’t subscribers. To make things even juicier for T, there will be NO discounts on the iPhone (initially) and more than likely, it will have a new MORE expensive plan (that includes voice and data) designed for it. This plan of course comes with a 2 year contract. More money in the bank for T (and their new BFF, Steve).
They are some skeptics/analysts that say the reception to the iPhone may be lukewarm based on a non-button format with no tactile feedback. Lets face it, this device will SELL OUT on launch, people will be breaking down doors of at&t and apple stores to get this thing. Unfortunately, if this device cannibalizes (which I doubt) Apple’s existing ipod line, it may shift revenue around at Apple (not counting towards true growth), but means nothing to At&t as they will get more new customers (subscriber growth) who desired ipods but held off to get the iPhone. T’s top brass are probably hoping for this (migration from ipod to iphone) on the cool anyway.
So, is the iPhone news already priced into at&t? Well, its had a healthy 19% run-up since the news was announced in January of it being the exclusive carrier. But heck, the Dow (which it is a member of) has had a real handsome runup in that period too (9.7%). If you do decide to purchase at&t at current price (40.24), buy half your lot now and half later. If it falls after “the launch”, you can add to your position on weakness. If it continues to go up and breakout’s above 41.50 (you can put a little more on the table), we could see 42.50 soon…. The median analyst target on the stock is 42.98, not that analysts get it right most of the time anyway. But remember, always HAVE an EXIT strategy — both on the way up or down!
This article is biased to T appreciating based solely on iPhone hoopla. T is a much more solid company that has many other revenue streams (and developments such as its nascent cell video to video technology) and can do well without the iPhone…but that device has enough buzz to put heat under T. This is a great company with room for further appreciation over the long run.
Disclaimer: I have no position in at&t stock as of the posting date of this article. This post is merely to present an idea and not to try to persuade you to buy/sell any security within. Please do your own Due Diligence BEFORE making any trades.
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