AT&T (T) Collaborates With IBM to Optimize Core Operations

Zacks Equity Research

AT&T Inc. T recently collaborated with International Business Machines Corporation IBM to facilitate diverse businesses to harness edge connections and edge computing capabilities. The deal seems to be the call of the hour with increased 5G deployments giving rise to large quantum of data.  

Per the multi-year strategic alliance, AT&T will leverage IBM’s domain expertise to augment the internal software applications of AT&T Business division for seamless migration to IBM Cloud. In addition to being the primary cloud provider for AT&T Business' operational applications, IBM will help manage its IT infrastructure across different clouds – private and public. This is likely to help AT&T to effectively deploy internal application workloads, while offering state-of-the-art services.

AT&T will also utilize IBM’s infrastructure and its open-source software platform Red Hat to optimize workload and better serve enterprise customers. The collaboration will offer the telecommunications company greater access to Red Hat Enterprise Linux and OpenShift platforms to facilitate workload portability and interoperability across any vendor's cloud, on or off premises. This, in turn, is expected to drive further innovation within the company through adoption of open and flexible cloud technologies.

On the other hand, IBM is likely to benefit by assigning AT&T Business its primary provider of software-defined networking solutions, thereby gaining easy accessibility to AT&T’s 5G, IoT and edge computing capabilities. Edge computing forms a core focus area for AT&T and marks a stride forward in providing faster processing and potentially enhanced security for business applications. AT&T Multi-access Edge Compute Services offer seamless cellular coverage to manage cellular traffic through virtual network functions.

Together, the companies aim to offer a flexible tool to better analyze data and process low-latency, high-bandwidth applications. The alliance particularly intends to enable customers to swiftly convert data into actionable intelligence, enabling unique digital experiences and smarter operations. Consequently, business processes are likely to witness a marked improvement with superior user experience and optimal performance across varied industries.

Moving forward, AT&T anticipates gaining an advantage over rivals through edge computing services that allow businesses to route application-specific traffic to where they need it and where it’s most effective — in the cloud, the network or on their premises. Through its Multi-access Edge Compute solution, the company offers the flexibility to better manage data traffic. It leverages indigenous software-defined network to enable low-latency, high-bandwidth applications for faster access to data processing. AT&T expects edge computing solutions to be widely available in autonomous vehicles, drones, robotic production lines and autonomous forklifts in the near future. Utilizing machine learning techniques and more connected devices, this could transform the way data-intensive images are transferred across the industry on real time basis.

We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. The stock has outperformed the industry year to date with average return of 17.7% compared with the 10.8% rise of the latter.

A couple of better-ranked stocks in the industry are United States Cellular Corporation USM, sporting a Zacks Rank #1 (Strong Buy) and Verizon Communications Inc. VZ, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United States Cellular beat earnings estimates in each of the last four quarters, the average positive surprise being 79.3%.   
Verizon has a long-term earnings growth expectation of 4.3%. It beat earnings estimates in each of the preceding four quarters, the average surprise being 3.3%.

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