Why Investors Might Consider Telecom

With recent innovation, the telecommunications industry has seen increasing strength, even for established companies such as Verizon VZ and AT&T T. In the Telecom industry there is a near-constant demand for products and services. In the modern world, the cell phone has become a near-necessity, and the recent expansion of 4G networks has contributed to customer demand for 4G-capable products. Analysts have largely endorsed Verizon stock in recent reports, and AT&T has also garnered a positive outlook from analysts and shareholders. The increasing presence of 4G technologies abroad seems to foretell a bright future for any telecommunications company with significant market share in 4G capable products. At a moment when more and more data is being channeled through mobile devices, there exists the potential for strong growth in this area. Yet, whether or not this increase in data usage will correlate with higher revenues and greater profits for the telecommunication industry remains to be seen. With positive fundamental and technical showings for Verizon and AT&T, these companies might perform strongly in future trading periods. Yet, the telecommunications industry consists of companies that sell tangible units and a less tangible service. This may contribute to investor uncertainty and create a slightly volatile difference between share price and company strength. ACTION ITEMS:

Bullish:

• The broader market may stay strong in this industry, with market potential making up for competition between companies.

• This is an industry that sees many highly anticipated innovations. Share prices will be affected by every successive release of innovative technology.

Bearish

• News about telecommunications companies may focus on specific plan offerings and how they compare to competitors. In an industry where buyer power is relatively low, these reports may exaggerate the disadvantage of one company to another and create perceptions that will affect market share.

• Significant disparities between share price and company strength in telecommunications. Share price drops may persist with uncertain investors.

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