360 Degrees of AT&T and Comcast

Editor's Note: In this edition of "360 Degrees," RealMoney commentators evaluate AT&T(T Quote) and Comcast(CMCSA Quote). Are they kings of the hill in telecom and cable, or are they bound to be laid low?

TheStreet.com has always believed that offering a wide variety of opinions and viewpoints -- rather than a monolithic "house view" -- helps readers make better-informed investment decisions. In that spirit, we bring you "360 Degrees."

"360 Degrees" is a feature that takes advantage of our varied stable of contributors to RealMoney, who offer analysis of stocks and the markets from all angles -- fundamental vs. technical, short-term trader vs. long-term investor.

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AT&T, Comcast Now Poised to Prosper, by James Cramer

This column was originally published on RealMoney on Oct. 24 at 9:41 a.m. EDT.

The national consolidation and rationalization of industries coupled with the slowdown in housing has produced some odd moves, but none more odd than the ascension of AT&T and Comcast into the sainted pantheon.

Look at these two stocks. Have they had a week where they have not rolled higher? For a half-decade we heard about how they were killing each other and that there was no end to the wars. We heard that they were going to kill each other's margins and businesses and that the telco-cable wars would leave both drubbed and bedraggled.

Instead, they hit 52-week highs over and over again. How did this happen?

First, it's true that the capital goods denouement is playing out right now. The run in the capital goods stocks seems to be over, and in its place are steady slow growers like Comcast and AT&T.

Second, these companies have bought back tremendous amounts of stock. But that's a factor many other companies share.

Third, the consolidation in both industries, cable and telephone, has led to a more benign pricing environment. Comcast can offer a triple-play (cable TV, phone, Internet) that is lucrative. AT&T-Cingular can offer a cell-phone play that is actually, for once, in great shape for profitability now that there are only a handful of cell-phone players and Sprint's(S Quote) imploding before our eyes.

There's not that much left to buy, so the companies aren't going to do more acquisitions. Comcast stole Adelphia because the morons there bankrupted a perfectly good cable company. There's no cable left to buy until Charter(CHTR Quote) goes bankrupt. AT&T was allowed to buy BellSouth(BLS Quote) to eliminate its biggest competitor. Verizon(VZ Quote) bought price-cutter WorldCom, too.

People were worried about Vonage(VG Quote), but that turned out to be a company that was spending outrageous sums to pump up subscribers in order to have a successful IPO, which was very successful for the company, albeit very unsuccessful for the shareholders -- many of whom were also subscribers. People were also concerned about Skype, and while Skype can take hold, it's the untethered cell phone that people love, with all its bells and whistles and cameras and ringtones and texting, the latter quickly becoming a national obsession. Don't forget that the exploding growth in Research In Motion(RIMM Quote) helps these companies, too.