When top brands get hitched, good things usually follow. That's welcome news for diehard Starbucks (Nasdaq: SBUX) investors who've seen the value of their shares decline by about 40% over the past year.
Starbucks is teaming up with AT&T (NYSE: T) to offer broadband wireless service at more than 7,000 U.S. locations. It's not that you couldn't get Wi-Fi service at Starbucks before, but you had to go through T-Mobile, a subsidiary of Deutsche Telekom AG (NYSE: DT), to get it.
Now, I have nothing against T-Mobile, but I work from a laptop, and it gets a little inconvenient to buy subscriptions to multiple Wi-Fi networks to cover all of the retail establishments I frequent. Life is hectic enough without having to keep track of where you are, what service is available, and all those pesky passwords. Recently, I've just started going to Panera Bread (Nasdaq: PNRA) simply because they offer free Wi-Fi access that's easy to connect to.
For Starbucks customers, the only requirement is that you need to have a reloadable Starbucks card to get two hours of free Wi-Fi service a day (I actually see the two-hour limit as a good thing -- it will limit my coffee consumption to no more than 10 cups a day). More than 12 million AT&T broadband and AT&T U-verse Internet customers will have unlimited free access to the Wi-Fi service. The new plan will roll out market by market beginning this spring, with completion scheduled before the end of the year.
This is one of several positive movements recently for Starbucks. The return of founder Howard Schultz propelled the stock briefly higher last month. The company is also trying to sharpen its competitive position against the likes of McDonald's (NYSE: MCD) through fewer store openings, closing a few underperforming domestic locations, experimenting with $1 refills, and eliminating breakfast sandwiches.
It's too soon to tell whether these initiatives are the first steps to revitalization. Last quarter's earnings release was pretty lukewarm. But at least management is making changes, and I don't expect Howard Schultz to undo a few years of missteps in a month. I suspect the alliance with AT&T is the start of something positive.
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