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Today: A bigger AT&T might bring consumers a better, faster network, but the carrier could have more power in the smartphone marketplace. Plus: More smartphone news, Google news, real estate update, Silicon Valley tech stocks.
AT&T’s $39B T-Mobile deal
Will a bigger, stronger AT&T — which revealed Sunday that it intends to buy much smaller rival T-Mobile for $39 billion in stock and cash — be good or bad for owners of Apple’s iPhone or the smartphones in Google’s Android army?
AT&T, for its part, said the deal would help it move faster to establish a nationwide 4G network that would provide higher-speed service to 95 percent of U.S. wireless customers.
“During the past few years, America’s high-tech industry has delivered innovation at unprecedented speed, and this combination will accelerate its continued growth,” AT&T CEO Randall Stephenson said in a news release announcing the deal.
In the near future, “it means improved service across the U.S. as a result of additional spectrum, towers and broader network infrastructure,” the wireless carrier noted in an FAQ posted on its website. “We expect capacity increases of approximately 30 percent in some densely populated areas.”
However, according to an Associated Press report, the upgrades mean T-Mobile customers eventually will need to replace their 3G phones.
A stronger AT&T: In an email today, Gleacher & Co. analyst Stephen Patel said the deal would strengthen AT&T. “The combined entity’s greater customer reach (130 million subscribers) and purchasing power could enable a more balanced market share for multiple ecosystems and make it less likely the U.S. evolves into a two-ecosystem-only market (Android/iOS),” Patel noted. “We view this as positive for the No. 3 and 4 ecosystems, BlackBerry and Windows Phone.”
In particular, Patel noted, AT&T will want to offer BlackBerry phones as “a counterweight to Apple/Google” and could push manufacturers to develop lower-cost Android phones.
Integration challenge: At least one analyst, though, believes combining T-Mobile into its network could be a huge challenge for AT&T. “That’s probably the most ambitious piece of this,” Stanford C. Bernstein analyst Craig Moffett told Bloomberg News. “That network is already struggling and has been ever since they landed the iPhone, so that network isn’t ready to dump a bunch of T-Mobile customers onto it.”
AT&T, you probably recall, was the exclusive iPhone carrier when Apple launched the device in 2007. Demand for data downloads overwhelmed AT&T’s network, particularly in congested urban areas such as San Francisco and New York. Just last month, AT&T rival Verizon Wireless started selling an iPhone designed for its network.
Fewer competitors: And, as Good Morning Silicon Valley’s Levi Sumagaysay noted today, the deal would reduce the number of national wireless carriers to three: AT&T, Verizon and Sprint Nextel.
For that reason, observers are expecting significant scrutiny of the deal by federal antitrust regulators. The House Judiciary Committee today said it will also examine the proposed merger and its effect on consumers.
AT&T, though, is arguing that cellphone customers have enjoyed lower prices even as the wireless industry has consolidated.
Stock prices: AT&T stock finished regular trading today at $28.26, up 32 cents, or 1.1 percent, from last week’s closing price. Sprint Nextel plunged 69 cents, or 13.6 percent, to $4.36. The U.S. shares of T-Mobile parent Deutsche Telekom — which would become AT&T’s largest stockholder — soared $1.55, or 11.4 percent, to close at $15.13.
Shares of Apple — the Cupertino iPhone maker — jumped $8.63, or 2.6 percent, to $339.30. Google climbed $15.44, or 2.8 percent, to $576.50. BlackBerry maker Research In Motion was up $1.26, or 2.1 percent, to $62.17. Microsoft gained 53 cents, or 2.1 percent, to $25.33.
The deal bolstered investors’ confidence in tech stocks and the broader market. More on that below.
More smartphone news
AT&T phones: The carrier today announced that it will be selling two new smartphones, including a new Android device that will run on its 4G network and come with a no-glasses 3-D display.
The LG Thrill — designed for video and gaming — is expected in “coming months,” according to an AT&T news release.
The HTC HD7S, meanwhile, will run Microsoft’s Windows Phone software and come with a 4.3-inch display.
Google phones: The Mountain View Internet juggernaut is teaming up with Sprint on two fronts:
More Google news
Our friends at AP are reporting today on Google developments around the world:
Real estate update
Nationwide home sales: Existing home sales fell in February at a seasonally adjusted rate of 9.6 percent from the month before, the National Association of Realtors reported. Year over year, sales were down 2.8 percent.
The median price, at $156,100, was down 5.2 percent from February 2010. According to AP, home values are at a nearly nine-year low.
California real estate: Pending home sales in the Golden State were up seasonally last month, but down 1.6 percent from February 2010 (when the market benefited from federal tax credits for many homebuyers), the California Association of Realtors reported, based on data from its local associations and multiple listing services.
Distress sales — foreclosures or “short sales” for less than the value of the mortgage on a home — accounted for 56 percent of transactions.
Silicon Valley tech stocks
Up: Silicon Valley’s 10 biggest tech stocks by market value — Apple, Google, Oracle, Intel, Cisco Systems, Hewlett-Packard, eBay, Gilead Sciences, VMware and Juniper Networks — all finished higher.
The tech-heavy Nasdaq composite index: Up 48.42, or 1.8 percent, to 2,692.09.
The blue chip Dow Jones industrial average: Up 178.01, or 1.5 percent, to 12,036.53.
And the widely watched Standard & Poor’s 500 index: Up 19.18, or 1.5 percent, to 1,298.38.
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.
From www.mercurynews.com
