Sprint Surges, Sohu.com Drops Following Earnings Reports

Sprint and Sohu.com are moving in opposite directions following their earnings reports. AT&T is leading the Dow Jones higher.

Feb 11, 2014 at 11:20AM

The Dow Jones Industrial Average (DJINDICES:^DJI) rallied early on Tuesday to rise more than 130 points as of 11:30 a.m. EST. Dow Jones component AT&T (NYSE:T) was outperforming its index, while rival Sprint (NYSE:S) surged 3.6%. In the tech segment, Sohu.com (NASDAQ:SOHU) was a notable underperformer. 

Market rises as Yellen testifies
New Federal Reserve Chairwoman Janet Yellen was testifying before a congressional panel Tuesday morning. She asserted that the U.S. labor market remains weak and that the economic recovery is "far from complete."

With the major indices on the upswing, investors may have interpreted her remarks as signalling a dovish outlook, suggesting that during her time as chair, the Fed will remain accomodative, supporting the economy and giving a boost to the stock market.

Analyst positive on AT&T
AT&T shares were up 1.6% following an initiation from Drexel Hamilton. The firm initiated AT&T with a buy rating and $40 price target, suggesting a 25% upside from the current stock level.

Even with Tuesday's rally, AT&T has been a disappointment so far in 2014, underperforming the Dow Jones by about 2%. A brewing price-war in the wireless industry is likely weighing on shares, as AT&T's rivals take aggressive steps to court its subscribers.

Sohu.com drops after earnings
Meanwhile, Chinese Internet company Sohu.com was down 2.4% at 11 a.m, although shares were trending upward as the session progressed.

Sohu.com's fourth-quarter earning came in mixed, with profit beating expectations but revenue falling short. In addition to the disappointing earnings, Morgan Stanley downgraded Sohu.com to underweight from equal weight, and raised concern about the company's margins going forward.

Despite the recent disappointment, Sohu has been a great stock to own in recent years, up nearly 100% from the summer of 2012. Still, it's been particularly volatile, at times experiencing wild swings. In that context, Tuesday's move is relatively tame.

Sprint picks up subscribers
Like Sohu.com, Sprint has been a volatile stock, and that continued on Tuesday, with shares up better than 4% at one point during the session. The rise follows an earnings report in which Sprint beat expectations for subscriber growth, profitability, and revenue.

Although Sprint had been bleeding subscribers in recent quarters, it ended the year with 53.9 million, its most ever. It did lose $1 billion, but that was less than analysts had expected, and less than what it lost in the same quarter last year.

A better investment than Sprint? 
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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