Assignment Please read the instructions carefully. You need to write 6 sentences for each article which includes what i have given in instructions.
Instructions
For the two articles below:
Write a few sentences explaining how the article is relevant to Verizon or Sprint Mobile. How and why would you expect it to affect stock prices, and whether they were affected in the way you expected (do this in terms of expected future earnings). Because traders buy or sell stocks immediately as new information becomes available, stock prices respond rapidly. Be sure to include the date of the article. You should be able to distinguish whether the news was relevant to only one of your stocks, your industry, or the whole market by noting the relative price changes - if only one of your stocks went up while the market was down, the news affected only your stock; if both your stocks moved differently from the market, the news probably affected your industry as a whole; if your stocks moved in tandem with the market, the news probably broadly affected the whole economy. You should also be able to explain why the news affected just one company, the industry, or the whole market. The articles selected should be balanced chronologically and topically.
article:1 China Aims to Build Its Own Secure Smartphones
State-owned and private tech firms team up to cut cord to U.S. suppliers
An employee inspects a circuit board in a manufacturing facility at ZTE's headquarters in the Nanshan district of Shenzhen, China. Photo: Brent Lewin/Bloomberg News
By
Eva Dou in Beijing and
Juro Osawa in Hong Kong
Updated Nov. 20, 2015 6:02 p.m. ET
China is seeking to make its own secure smartphones, in an attempt to insulate its handsets from U.S. surveillance.
The effort involves both state-owned companies and some of the country’s savvier technology firms and marks the latest step in Beijing’s quest to build a homegrown tech industry that cuts out U.S. suppliers.
Chinese officials have long chafed at U.S. companies’ dominance in smartphone operating systems and processors—the parts of a handset most vulnerable to hacking. In China, the world’s largest smartphone market, almost all handsets are either Apple Inc. iPhones or are powered by Google’s Android operating system.
For years, China’s lagging technology meant there was little it could do. The country’s first lady, Peng Liyuan, last year switched publicly to a Chinese-made smartphone, the ZTE Nubia Z5, after being criticized for using an iPhone, yet the Chinese device ran on Android and included a Qualcomm Inc. processor, according to its specifications list.
Now, a number of Chinese technology companies are making progress toward cutting the cords to Western technology. China is encouraging that effort, spurred by revelations in 2013 from former U.S. National Security Agency contractor Edward Snowden that the NSA had placed surveillance “back doors” in some American gear sold overseas.
Chinese smartphone maker ZTE Corp. is working on a secure smartphone for government agencies using an operating system developed in-house, and a processor chip from a Chinese supplier, a spokesman said. The country’s largest chip-design company, Spreadtrum Communications Inc., separately said it would begin mass producing a set of chips that run a Chinese operating system by year-end.
Chinese e-commerce company Alibaba Group Holding Ltd. has joined with China’s Ministry of Public Security to develop a mobile operating system for police officers that it bills as more secure.
ENLARGE
A worker examines machinery used to adhere components to smartphone circuit boards at ZTE’s headquarters in Shenzhen, China. Photo: Brent Lewin/Bloomberg News
All of the efforts target a niche group of government agencies and state-owned enterprises and are unlikely to appeal to the average consumer. ZTE’s secure phone, for example, will come without camera, GPS, Wi-Fi and Bluetooth wireless connections to minimize security risks.
The trend is unlikely to have much impact on the market share in China of U.S. mobile components and software. Analyst James Yan of market-research firm IDC estimates secure phones might make up 3% of China’s smartphone sales next year, or about two million units. But if more made-in-China operating systems and processors make their way into consumer handsets, that could potentially pose a challenge for Google’s Android and for Qualcomm.
Qualcomm, whose processors accounted for 52% of the smartphone market last year, according to Strategy Analytics, declined to comment.
Alphabet Inc. ’s Google, whose Android system ran 82.8% of the world’s smartphones in the second quarter of this year, according to IDC, didn’t immediately have a comment.
Other U.S. tech companies already are feeling a chill in China. U.S. networking- and computing-gear makers such as International Business Machines Corp. and Cisco Systems Inc. have recorded sales declines, as government agencies and state-owned enterprises buy more from domestic counterparts such as Chinese server maker Inspur Group Co. and telecommunications-gear supplier Huawei Technologies Co.
Cisco doesn’t provide sales figures for specific countries, but has said the Snowden disclosures affected its China sales. IBM has attributed sales setbacks to China’s economic slowdown. Both companies say they don’t build “back doors” into their technology.
In smartphones, Chinese banks have begun to buy more domestic brands, though formal quotas were suspended earlier this year because of U.S. pressure. China had wanted to require that 50% of new smartphone purchases at financial institutions meet “secure and controllable” standards, according to a copy of the suspended rules reviewed by The Wall Street Journal.
China’s push to build homegrown secure handsets also has economic benefits: The components that are crucial to security are also some of the most profitable.
But even with made-in-China processors, modems and operating systems, Chinese secure phones will likely include plenty of foreign components, albeit less-sensitive ones.
A spokesman for ZTE said it isn’t possible to use exclusively Chinese-made hardware and software in a smartphone, but to meet the needs of government agencies it is trying to use domestic suppliers as much as possible.
Other Chinese phone makers, including Coolpad Group Ltd. and Qihoo 360 Technology Co. , are scrambling for a piece of the market too, touting security features such as data encryption in their new handsets this year.
“Right now the security sector is very hot,” said Chris DeAngelis, Beijing-based general manager at consultancy Alliance Development Group. “The government is looking for nonforeign technologies as much as possible to prevent various back doors.”
Leo Li, chief executive of Spreadtrum, said his company will begin sales this year of special chipsets that will let phone users switch between Android and an encrypted operating system made by Chinese company Yuanxin Technology Co.
“Your voice is encrypted. Your data is encrypted. It is very secure,” he said.
But just because a phone has domestically made guts doesn’t mean it is secure, said Bryce Boland, Asia chief technology officer for network-security company FireEye Inc. A hacker could still siphon data directly from a telecom operator, he said. New operating systems are also likely to have more vulnerabilities.
China isn’t alone in seeking a high-security smartphone for government work. The U.S. NSA developed its own domestic version in 2009, although it this year switched to a new system based on Samsung Electronics Co. smartphones with customized secure software. The NSA-developed phone was “overtaken by technology by the time it was actually delivered,” Debora Plunkett, the NSA’s information assurance director, told National Defense Magazine in 2012.
Lao Yao, secretary-general of the China Smartphone Alliance, said some Western governments work with BlackBerry Ltd. of Canada to custom make high-security phones for their officials, but that China and Western companies don’t trust each other enough for this to be an option. “China has no choice but to develop its own operating system to maintain security,” he said.
—Gillian Wong in Beijing contributed to this article.
Write to Eva Dou at [email protected] and Juro Osawa at [email protected]
article 2: Sprint to Get Cash Infusion With Deal to Sell and Lease Back Devices
Transaction, for $1.1 billion, would essentially act as a loan
ENLARGE
Sprint, the No. 4 wireless carrier in the U.S. by subscribers, has been working to improve its network. Photo: mike blake/Reuters
By
Ezequiel Minaya and
Ryan Knutson
Updated Nov. 20, 2015 1:54 p.m. ET
Sprint Corp. took a big, if unusual, step on Friday to address its cash woes and take some risk off its books.
The carrier, which has been losing customers and money for years, said it would get a $1.1 billion cash infusion through a deal to sell certain handsets and other devices it has leased to its customers. The purchaser is a newly formed entity—backed by Sprint parent SoftBank Group Corp.—that will rent the devices back to the carrier.
Sprint said the transaction essentially serves as a loan that will cost it less than tapping debt markets, freeing up much-needed resources for network investment and operations.
Sprint, the No. 4 wireless carrier in the U.S. by subscribers, has struggled with competition and a difficult network overhaul. Its network has improved recently, and in the most recent quarter, Sprint added 237,000 of the more desirable postpaid phone subscribers, although 199,000 of those came from converting its own customers from prepaid arrangements. In an effort to boost subscriber gains, Sprint also launched a promotion this week to sell wireless service for half the price charged by rivals.
The carrier, which is based in Overland Park, Kan., has more than $30 billion in total debt, and hasn’t posted an annual profit since 2006. It reported a loss of $585 million for its latest quarter. In September, Moody’s downgraded Sprint’s bonds to B3, citing concerns about the company’s turnaround plan. The carrier has said it has no plans to tap debt or equity markets in the foreseeable future.
Advertisement
The deal to sell 2.5 million device leases to the new entity, called Mobile Leasing Solutions LLC, will help reduce one of Sprint’s biggest expenses: the cost of purchasing millions of new iPhones and other devices. The carrier in turn leases them to individual subscribers, who must either return the phone at the end of the lease or pay extra to buy it outright.
Sprint’s relationship with SoftBank, which owns more than 80% of Sprint, as well as with phone-distribution firm Brightstar Corp., which was founded by Sprint’s CEO, helps give the carrier access to favorable terms on the deal with Mobile Leasing Solutions. The latter was formed by a group of equity investors including SoftBank, and has secured debt financing from several lenders, including international banks and leasing companies.
Sprint Chief Financial Officer Tarek Robbiati said Sprint expects to execute additional deals roughly every quarter, and is also working on a similar structure to finance network construction. Mr. Robbiati said the implied cost of funds was in the “mid-single digits,” which is well below the carrier’s high-yield alternatives, although he wouldn’t provide a specific number.
Reaction to the deal was mixed. Analysts at Evercore said they were “cautious of whether the deal improves [Sprint’s] actual business model or instead just moves some of the risk off balance sheet.” Analysts at Macquarie Securities said the deal was “a major positive for Sprint shares” and would dramatically improve the company’s cash-burn rate, helping it focus on new growth.
Sprint shares fell more than 5% on Friday.
The newly formed entity will rely on Brightstar to resell the used devices at the end of each lease. Sprint said it envisions the deal including only high-end devices, which have the highest resale value. Used phones are easily sold in developing markets overseas; they are also useful for insurance programs that replace broken phones.
In the wake of the deal, Sprint revised its annual outlook for adjusted earnings before interest, depreciation, taxes and amortization to a range between $6.8 billion and $7.1 billion, down from a previous forecast of $7.2 billion to $7.6 billion. The transaction is expected to close in early December.
Write to Ezequiel Minaya at [email protected] and Ryan Knutson at [email protected]
Sprint Corp. took a big, if unusual, step on Friday to address its cash woes and take some risk off its books.
The carrier, which has been losing customers and money for years, said it would get a $1.1 billion cash infusion through a deal to sell certain handsets and other devices it has leased to its customers. The purchaser is a newly formed entity—backed by Sprint parent SoftBank Group Corp.—that will rent the devices back to the carrier.
Sprint said the transaction essentially serves as a loan that will cost it less than tapping debt markets, freeing up much-needed resources for network investment and operations.
Sprint, the No. 4 wireless carrier in the U.S. by subscribers, has struggled with competition and a difficult network overhaul. Its network has improved recently, and in the most recent quarter, Sprint added 237,000 of the more desirable postpaid phone subscribers, although 199,000 of those came from converting its own customers from prepaid arrangements. In an effort to boost subscriber gains, Sprint also launched a promotion this week to sell wireless service for half the price charged by rivals.
The carrier, which is based in Overland Park, Kan., has more than $30 billion in total debt, and hasn’t posted an annual profit since 2006. It reported a loss of $585 million for its latest quarter. In September, Moody’s downgraded Sprint’s bonds to B3, citing concerns about the company’s turnaround plan. The carrier has said it has no plans to tap debt or equity markets in the foreseeable future.
The deal to sell 2.5 million device leases to the new entity, called Mobile Leasing Solutions LLC, will help reduce one of Sprint’s biggest expenses: the cost of purchasing millions of new iPhones and other devices. The carrier in turn leases them to individual subscribers, who must either return the phone at the end of the lease or pay extra to buy it outright.
Sprint’s relationship with SoftBank, which owns more than 80% of Sprint, as well as with phone-distribution firm Brightstar Corp., which was founded by Sprint’s CEO, helps give the carrier access to favorable terms on the deal with Mobile Leasing Solutions. The latter was formed by a group of equity investors including SoftBank, and has secured debt financing from several lenders, including international banks and leasing companies.
Sprint Chief Financial Officer Tarek Robbiati said Sprint expects to execute additional deals roughly every quarter, and is also working on a similar structure to finance network construction. Mr. Robbiati said the implied cost of funds was in the “mid-single digits,” which is well below the carrier’s high-yield alternatives, although he wouldn’t provide a specific number.
Reaction to the deal was mixed. Analysts at Evercore said they were “cautious of whether the deal improves [Sprint’s] actual business model or instead just moves some of the risk off balance sheet.” Analysts at Macquarie Securities said the deal was “a major positive for Sprint shares” and would dramatically improve the company’s cash-burn rate, helping it focus on new growth.
Sprint shares fell more than 5% on Friday.
The newly formed entity will rely on Brightstar to resell the used devices at the end of each lease. Sprint said it envisions the deal including only high-end devices, which have the highest resale value. Used phones are easily sold in developing markets overseas; they are also useful for insurance programs that replace broken phones.
In the wake of the deal, Sprint revised its annual outlook for adjusted earnings before interest, depreciation, taxes and amortization to a range between $6.8 billion and $7.1 billion, down from a previous forecast of $7.2 billion to $7.6 billion. The transaction is expected to close in early
