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US Carriers Spanked on Big Red's Q4 Margin Squeeze

Dan Jones

Verizon's warning about holiday price pressures hitting mobile margins in its winter quarter has cast a chill on the other major US carriers too.

AT&T Inc. (NYSE: T), Sprint Corp. (NYSE: S), T-Mobile US Inc. and Verizon Communications Inc. (NYSE: VZ) all saw their share prices fall on Tuesday, following Big Red's warning that holiday pricing offers and heavy customer volume will squeeze its fourth-quarter wireless margins. (See Holiday Deals Squeeze Verizon's Q4 Wireless Margins.)

Verizon was also downgraded by two financial analyst firms Tuesday following the warning. Robert W. Baird & Co. Inc. lowered its rating on Verizon Communications from "Outperform" to "Neutral" this morning. Credit Suisse , meanwhile, lowered Verizon's share price target from $52.00 to $51.00 Tuesday morning.

Verizon is trading at $46.85, down $2.05 or 4.19%, this Tuesday morning. The other major US carriers are also feeling the tailwinds from Verizon's announcement though.

AT&T is trading down $0.90 -- or 2.66% -- at $32.98 this morning. Sprint is at $4.60, down $0.15 or 3.16%, on the street. T-Mobile's shares have fallen 5.25% to $26.72 in early trading.

Happy holidays, service providers!

— Dan Jones, Mobile Editor, Light Reading

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12/11/2014 | 2:44:55 PM
Re: Premium...
Fortunately Verizon still seems to have the lead in terms of LTE speed (thanks to new XLTE deployments) and coverage, so mirroring what they're doing on that front has been no easy task for T-Mobile and Sprint.
12/10/2014 | 7:27:45 PM
Re: Premium...
Customer acquisition is not a cheap prospect, and I think that Verizon is feeling the pain there. Not much you can do about that! 

Also, when it affects Verizon, it affects everyone else because I think many times the competition has to mirror what "big red" is doing. 
12/10/2014 | 3:31:04 PM
One wonders just how long Verizon will be able to continue with their "premium performance means premium pricing" strategy? So far the customer satisfaction and speedtests are propping that up (see the latest RootMetrics study), but you have to wonder how long that will last in the face of improving networks over at AT&T, T-Mobile (and maybe someday) Sprint. Also I feel like investors may be over-reacting a little, since Verizon Wireless is in no way hurting when it comes to overall revenues.
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