Why Apple has little to do with these 2 rocking telecom shares

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That is The Takeaway from right now’s Morning Temporary, which you’ll join to obtain in your inbox each morning together with:

You can’t pin all of the credit score on Apple (AAPL) for the surging inventory costs this yr for AT&T (T) and T-Cellular (TMUS).

I might really argue Apple deserves not one of the credit score. Sorry, not sorry, Tim Prepare dinner!

Who deserves the credit score? The highest brass at every firm which have been centered on operating extra beastly telecom operations. I’m speaking a few maniacal give attention to revenue margins, free money movement technology, and growth of probably profitable alternatives. And in flip, there was zero give attention to doing dumb issues with shareholder cash like increasing into the media enterprise.

First up on this analytical drill-down is Dallas, Texas-based AT&T, led by firm veteran John Stankey.

At an investor day this week, Stankey used his trademark deep voice (see video above) to stipulate greater than $40 billion to be returned to shareholders over the following three years by way of inventory buybacks and dividends. What actually caught my consideration was the steerage for double-digit proportion earnings progress in 2027.

AT&T and double-digit earnings progress usually aren’t heard in the identical sentence.

Execs are betting that investments in 5G infrastructure and fiber will yield a faster tempo of gross sales and earnings progress than seen in 2024.

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For Stankey, the year-end investor day capped his continued efforts to pivot again to easily being a telecom big.

In April 2022, AT&T closed its deal to spin off its WarnerMedia division, which it had bought for a colossal $85 billion simply three years earlier. The transfer mixed WarnerMedia’s HBO and CNN with Discovery’s HGTV, Animal Planet, Meals Community, and TLC.

The deal has been a full-on catastrophe for CEO David Zaslav who leads the now Warner Bros. Discovery (WBD).

For the reason that spin-off, AT&T has zeroed in on lowering debt, partly from the WarnerMedia acquisition. In September, AT&T bought its majority stake in TV supplier DirecTV to personal fairness agency TPG for $7.6 billion.

AT&T’s long-term debt now stands at $126 billion, down from greater than $128 billion in 2022.

“I can say that we’re again in progress mode,” Stankey informed me on Yahoo Finance’s Market Domination. “I believe we’re early innings in our success story, so I do not assume it is mission completed.”

Stankey added he is bullish on the Trump administration offering tailwinds to his enterprise, particularly if tax cuts are prolonged.

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