One of the intriguing aspects of the huge bid by AT&T Inc. (NYSE: T) for DirecTV (NASDAQ: DTV) is that many on Wall Street feel that the acquisition of the satellite entertainment provider will change the company’s U-verse strategy. U-verse was the AT&T answer to Verizon Communications Inc.’s (NYSE: VZ) FIOS offering, which brought programming and high-speed Internet to the premises via fiber optic cable. A new report from Jefferies cites the distinct possibility that the new AT&T focus on satellite delivery and other initiatives could prove damaging to some of the top tech companies that serve as suppliers. In fact, it notes that spending on the wireline side of AT&T took a significant dip beginning in early to mid-April.
Here are the companies that Jefferies mentions that have exposure to the wireline side of AT&T, and could lose revenue as a result of the company’s shift in strategy.
ADTRAN Inc. (NASDAQ: ADTN) is a leading global provider of networking and communications equipment. ADTRAN’s products enable voice, data, video and Internet communications across a variety of network infrastructures. ADTRAN solutions are currently in use by service providers, private enterprises, government organizations and millions of individual users worldwide. Investors receive a 1.6% dividend. The Thomson/First Call price target is $24.38. ADTRAN closed Friday at $22.44 a share.
Alcatel-Lucent S.A. (NYSE: ALU) is a stock that the Jefferies team thinks probably would get stung less than other top vendors by the drop in spending. The irony is that, after so many years of struggling with the ill-fated merger, the company has finally started to pull itself off the deck and get earnings back on track. The consensus price target for the stock is $4.75. The stock closed trading on Friday at $4.01.