T-Mobile Us, Inc. TMUS made the difficult decision to lay off workers. Indeed, the company is going through various organizational changes. After signing the takeover of Sprint, it had about 80,000 workers. It ended 2021 with 75,000 workers.
TMUS made layoffs in the engineering group and network division. Leaders and managers were negatively affected by the move.
T-Mobile has incurred significant costs to increase revenue and obtain customers. But that hasn’t translated into increased returns for shareholders. The company’s bottom line didn’t improve much, even after introducing various low-cost service plans for small businesses and customers.
The company offers the same services at a reduced rate for three years after the merger. The revamped T-Mobile competes for consumers at all price points. Customers, including prepaid and Lifeline, have access to the same 5G network and services. The combined company’s network has 14 times more capacity than on a stand-alone basis, putting it ahead of the competition in terms of network capacity and customer experience.
Additionally, T-Mobile launched new Magenta for Business plans, with Microsoft 365 included at no additional cost on up to two lines per account. All of this affected the bottom line.
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Additionally, T-Mobile and other mobile carriers use a leasing strategy to attract more customers, thereby exposing them to credit risk. Given that the global market is currently very volatile, highly leveraged companies are expected to experience a contraction in production and growth. Residual values of refurbished phones, which companies seek to sell in other markets, pose a high liquidity risk if things don’t go as planned.
Such challenges are likely to result in a sudden drop in business revenue. This is probably the driving factor in reducing expenses, as it aims to reduce operational costs.
The stock has gained 5.6% over the past year, as the industry has fallen 21%. T-Mobile currently carries a Zacks Rank #3 (Hold).
You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Global SA GLOB is a higher-ranked stock within the broader Zacks IT and Technology sector, sporting a Zacks No. 1 rank. Zacks’ consensus estimate for its current-year earnings has been revised to the up 0.8% over the past seven days.
Globant posted a four-quarter earnings surprise of 3.2% on average. It has lost 38.3% over the past year.
Harmonic Inc. HLIT has a Zacks rank of No. 2. The current year earnings consensus estimate has been revised up 17.1% in the past 30 days.
Harmonic delivered a four-quarter earnings surprise of 79.3% on average. It has gained 19.6% over the past year.
Thermon Group Holdings, Inc. THR, sporting a Zacks Rank #1, is another solid choice for investors. Thermon’s consensus earnings estimate for the current year has been revised up 9.7% in the past seven days.
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