Sale of advertising division

AT&T (T) will sell its advertising division to Xandr Microsoft (MSFT) for an undisclosed sum. The deal should benefit both companies and is indicative of AT&T's ongoing restructuring and Microsoft's growing digital advertising business.

AT&T (T) on Tuesday said it had agreed to sell its programmatic advertising company Xandr Inc to Microsoft (MSFT), without disclosing the amount of the deal or a timeline for closing.

Xandr and Microsoft have long collaborated and their merger is relevant at a time when the digital advertising business is undergoing a transformation and move away from cookies. Apple (APPL) and Google Alphabet (GOOGL,GOOG) are now planning to do away with tracking cookies, making it harder for marketers to track users' online activity and tailor advertising to them.

Xandr's media solutions for advertisers will be complemented by Microsoft's analytics and data management technology solutions.

AT&T (T) shares, down 15% YTD but up 9.8% in the last week, were up 1.16% on Tuesday. Trading signals and forecasts for AT&T stock.

Microsoft (MSFT) shares, up 47% YTD, rose 2.3% on Tuesday. Trading signals and forecasts for Microsoft shares.

The sale of Xandr speaks to the ongoing restructuring of AT&T, which is seeking to focus on its core telecoms business and the 5G sector. AT&T earlier spun off its DirecTV satellite business to merge TPG, while its WarnerMedia unit is to merge with Discovery Inc. to become a new independent company.

Earlier this year, research firm Axios reported that Xandr has annual revenues of $300 $380 million and annual losses of $50 $90 million. The media wrote that AT&T was actively seeking a buyer for Xandr to take the business off its balance sheet. Xandr has around 1,200 employees.

The deal also demonstrates Microsoft's efforts to grow its digital advertising business, a market dominated by Facebook (Meta Platforms) and Google. Microsoft's search and news advertising revenues in the September quarter were about $1.9 billion, up 37% from a year earlier.

A case study on the Xandr website shows how the company helps Microsoft monetize its Microsoft News site.

In a press release about the deal, Xandr says that "Microsoft will contribute to the development of the future digital advertising market."