Does Getting the New Amazon Phone Make AT&T a Buy Today?

AT&T will be the sole carrier for Amazon's new phone, but will this be the coup for AT&T that the Apple iPhone was?

Jun 17, 2014 at 6:33PM

Earlier today, Amazon.com (NASDAQ:AMZN) announced that AT&T (NYSE:T) will be the exclusive carrier for its new phone, which the e-commerce giant will reveal on Wednesday. Investors may remember what being the exclusive carrier for Apple's iPhone did for the company, and there's excitement over the prospect that this new phone could have similar benefits for AT&T's bottom line. 

Unfortunately, according to Motley Fool analyst Eric Bleeker, this new phone won't have nearly the same positive impact for AT&T. Eric believes that while cool features like a 3-D display with retina tracking built in sounds like a bit of a gimmick, he points out that more importantly, the market is saturated with smartphones. While the iPhone was something that had never been seen before, Amazon will be trying to sell a phone to people who probably already have a pretty good one. 

So, should investors be buying AT&T shares on today's news? On the Motley Fool's Stock of the Day, Eric says that the only people who should buy shares of AT&T are those who want a nice boring stock for their portfolio. The company is up only 15% in the last three years, but it does pay a dividend with a 5.3% yield. With a P/E of 10, AT&T looks like a pretty decent income investment, but Eric doesn't think it's going to pop because of Amazon's new phone.

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Eric Bleeker, CFA has no position in any stocks mentioned. Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. 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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