What is the Technology, Media, and Telecom (TMT) Sector
The technology, media, and telecom (TMT) sector, sometimes also referred to as technology, media, and communications (TMC), is an industry sector used by investment bankers, investors, traders and other market participants. Because this industry segment covers a broad range, it is often useful to break down TMT into sub-sectors such as semiconductors, hardware, software, mobile, Internet, networking, etc. Because this sector contains new and high-tech firms, it experiences a large amount of mergers, acquisitions and initial public offerings (IPOs).
BREAKING DOWN Technology, Media, and Telecom (TMT) Sector
The technology, media and telecom sector includes a wide range of companies, but they are interrelated in that they heavily depend on research & development (R&D), the value of patents and other intellectual property protections, and preferring rapid company growth. As a result, valuation of companies in this industry segment may tolerate relatively high price to earnings (P/E) ratios in favor of enterprise value to sales (EV/Sales).
Within the TMT sector it is useful to subdivide it into relevant sub-sectors. Semiconductor manufacturers develop and produce integrated circuits and microchips used in all sorts of applications from personal computers and mobile devices to robotics and industrial machinery. Some representative firms are Intel, AMD, Texas Instruments and Nvidia.
Telecom focus on communications-related businesses such as phone, TV and Internet service providers and include players such as AT&T, Verizon, and Sprint.
Hardware includes computer makers (IBM, DELL, HPQ), but also makers of server systems, mobile device handsets, tablets and storage devices such as hard drives and memory.
Internet companies exist online and include companies like Facebook, Groupon, LinkedIn and Zynga.
Software companies produce computer or mobile applications for both individuals and enterprise and include Microsoft, Adobe, and SAP.
Networking companies maintain, install, and produce components for wired and wireless computer networks including fiber optic cable, switches and routers. Some big players in the networking space include Cisco Systems, Juniper Networks, Netgear and Ciena Corporation.
Media companies develop, produce and distribute multimedia content on TV, radio, in print and online. Television networks, cable TV providers, production studios and social media companies may all be included in this sub-sector.
Different market participants may categorize different TMT companies in different sub-sectors. Facebook may be viewed as either Internet or media, and Apple as Internet, hardware, software and media depending on who is judging the company. Other examples that cross sub-sectors are Hulu, Amazon and Netflix. Sometimes, companies in one sub-sector of TMT will merge or acquire another to consolidate, diversify and broaden product offerings. This has been seen in the examples of AOL and Time Warner, AT&T and Dish Network, and Dell and EMC.