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12 Top Stocks Based on PEG and Price Momentum
by: Scott's Investments September 27, 2010 | about: AZO / COH / CPRT / CTCM / FCFS / FOSL / FSLR / IDCC / JOSB / SH / SHOO / SPY / TXN / USNA
I conduct the following screen on a monthly basis. Early out-of-sample results have been mixed, performing well during bullish environments and poorly during bearish/choppy markets. Last month's list here. The screen looks for the following:
o earnings growers still reasonably priced as judged by the PEG ratio
o low debt
o a history of high return on equity and investment, and
o price momentum as gauged by the percentage the stock is trading to its 250 day high.
Last month's list returned a whopping 16.17% versus 7.87% for SPY. It is worth noting last month's list had very few stocks that qualified for the list, three in total. (Here's how previous months fared: January's list returned 1.39% vs .57% for SPY. February's list returned a solid 11.78% vs. 6.77% for SPY. March returned 7.91% vs. 4.23% for SPY, April was a down month, nearly matching SPY in returning -11.57% vs -11.52% for SPY, May's list returned -6.55% vs -.56% for SPY, June's list returned -1.74% vs. 3.27% for SPY, July returned a sour -10.36% vs -5.55% for SPY.)
When the screen results in more than 5-10 stocks I have also started tracking returns of the top 5 or 10 stocks at the beginning of each list (when more than 5 stocks qualify). The top stocks are selected based on fundamental factors. For the full list of stocks and results, please see the right hand side of Scott's Investments.
The screen has tested well historically in bullish periods so strategies an investor could use to avoid drawdowns would be to either a) abandon this type of strategy entirely when the S&P 500 or another major index is below a long term moving average, or b) hedge positions with a position in ProShares' Short S&P ETF (SH) or write a short option strategy on an equity index or ETF like SPY.
This month's list contains 12 stocks,and two of the three stocks on last month's list remain on this month's list.
Ticker Name Trend Rank MktCap Industry
TXN Texas Instruments Incorporate Here 96.29 32186.61 Semiconductors
JOSB Jos. A. Bank Clothiers, Inc. Here 96.17 1172.07 Retail (Apparel)
FOSL Fossil, Inc. Here 95.53 3559.52 Jewelry & Silverware
IDCC InterDigital, Inc. Here 94.03 1261.24 Communications Equipment
SHOO Steven Madden, Ltd. Here 93.5 1095.05 Footwear
FCFS First Cash Financial Services Here 90.16 800.21 Retail (Specialty)
USNA USANA Health Sciences, Inc. Here 88.77 630.43 Personal & Household Prods.
COH Coach, Inc. Here 87.09 12621.91 Retail (Apparel)
AZO AutoZone, Inc. Here 81.86 10182 Retail (Specialty)
CTCM CTC Media, Inc. Here 72.53 3323.15 Broadcasting & Cable TV
CPRT Copart, Inc. Here 63.93 2860.06 Retail (Specialty)
FSLR First Solar, Inc. Here 43.36 12584.28 Semiconductors
Two possible tools an investor could use to conduct this screen on his/her own are stockscreen123 or Finviz. This screen was conducted using stockscreen123.
Disclosure: No positions in stocks mentioned
Sorry! Didn't see the earlier post.
Living Room Shopping: Potential Digital Media M&A Targets
By Eric Savitz
UBS analyst Maynard Um yesterday published a detailed 48-page look at the future of the digital living room - in essence, he’s attempted to suss out the winners in the vast battle for control of your home entertainment dollars. His core thesis is that “the brewing battle between the megacaps to own the consumer is hinged to ecosystems that allow seamless content access everywhere and at all times.”
On that basis, his conclusion is that Apple (AAPL), Google (GOOG) and Microsoft (MSFT) are the “early front runners,” with Amazon (AMZN), Samsung and Sony (SNE) “dark horses” He contends that Hewlett-Packard (HPQ), Research In Motion (RIMM) and Nokia (NOK) are “challenged.”
Anyway, towards the end of the report, Um provides a rundown on parts of the digital content universe that are likely to be to the subject to consolidation. He lists voice recognition, motion sensing technology, search, compression, content delivery, IP, mobile ads, analysts, mobile payments and location-based technology as areas likely to be targeted. And all that would be interesting, but not worth mentioning, were it not for the fact that he offers a list of likely targets.
* Voice: Targets in the voice market include Nuance (NUAN), plus a host of private companies, including Loquendo, Telisma, SVOX, Acapela and iFLYTEK.
* Motion Sensing: Private companies that could be acquired include Primesense, Hillcrest, Reactrix Systems, and GestureTek.
* Compression and content delivery: He singles out Akamai (AKAM), the largest single player in content delivery, as a potential target.
* IP: He sees possible targets in Rovi (ROVI), a provider of interactive programming guides that just did a licensing deal with Apple, as well as Interdigital (IDCC), which has patents in wireless communications, an counts many handset makers among its licensees.
* Mobile ads and analytics: There have already been large deals in this area - Google/AdMob, Apple/Quattro - but he sees other potential targets in privately analytics companies Medialets, webtrends, Localytics and Flurry.
* Mobile payments: He sees potential targets in Shopkick, Square and Boku, as well as Verifone (PAY).
* Location-based technology: Without specifically calling them a target, he makes note of the popularity of Foursquare.
https://mail.google.com/mail/?hl=en&shva=1#sent/12b403df27c5b2c2
Press Release Source: Applied Nanotech Holdings, Inc. On Monday September 20, 2010, 12:38 pm
AUSTIN, Texas, Sept. 20, 2010 (GLOBE NEWSWIRE) -- Applied Nanotech Holdings, Inc. (OTCBB:APNT - News) announced that it will showcase some of its key nanotechnology advancements in metallic inks and pastes at the NIP26 Digital Printing Technologies Conference being held at the Hilton Hotel in Austin, TX from September 21-23, 2010.
At its booth, ANI will exhibit its new aluminum inks and pastes that have been optimized for noncontact printing applications in the solar PV industry, and its nanoparticle-based nickel inks for printing conductive lines and barrier layers for applications in the printed electronics and solar PV industries. The ANI inks and pastes are aimed at improving manufacturing yields and lowering manufacturing costs through process step elimination. ANI recently announced that it has received a $1.6M grant from the U.S. Department of Energy to establish a pilot manufacturing line for these ink technologies.
In addition, ANI will exhibit its R&D100 award winning nanoparticle-based copper inks and pastes developed for inkjet and screen printing, as well as its silver inks and pastes.
ANI has a "Total Inks Printing Solutions" approach, offering expertise from raw nanoparticles, to ink formulations and dispersions, to printing and curing equipment and processes, to integration into high throughput printing lines. ANI works closely with strategic partners to provide complete printing solutions, facilitating product development and commercialization timelines for our customers.
ANI will be exhibiting at the NIP show with UniJet Co., Ltd, a Korean inkjet printer manufacturer, as well as Xenon Corporation, a flash lamp curing equipment manufacturer. UniJet will be exhibiting their benchtop OmniJet 100 inkjet printer system, and Xenon will present the Sinteron 2000 for curing printed metallic inks. Together we offer complementary products and solutions for the printed electronics industry.
For more information about UniJet or Xenon, visit http://www.unijet.co.kr/eng/main/index.html or http://www.xenoncorp.com. For more information about the NIP26 Digital Printing Conference, visit www.imaging.org/IST/conferences/nip/.
Here it is folks..... Yonex!!!
Open this site, and watch "NanoScience" appear in the videos. Then click on the various sites and watch Nano-technology show up in "Lots" of locations/products.
Now let's wait for the Contract/Royalties to become official.
I'm a little out of front, but try saying "Ka-Ching!"
http://www.yonex.com/
Nice move.....Up 10% today. It should be fun to watch what happens when Ishihara and Yonex announce products with us inside. Let's see....
The Yonex info and announcement is coming in the next 2 days as per this info from my earlier, #49954, post (and Doug's Shareholder letter, on Raging Bull.)
2. IMO, Our relationship with Yonex is close to bearing Fruit (Royalties.) Here, DB notes and implies, "The project with our sporting goods partner in Japan to tailor our material for golf shafts is progressing nicely and we expect them to exercise their option to license the material for golf shafts, in addition to the license that they already signed for tennis and badminton racquets, when the project ends at the end of November. We have been informed by our partner that they are making plans to introduce a product and scale up to volume manufacturing. While we don’t yet know the timing of introduction of their product, we believe it is simply a matter of when, not if, it is introduced." And, Yonex appears to have an announcement ready for this Friday. See -
==========================
http://tinyurl.com/29bdssj
==========================
Here's Today's presentation (by Janet and a Tech spec.)
http://files.shareholder.com/downloads/IDCC/853967205x5064163x403233/219b57a2-47a2-442f-89c6-8563cde7f8e5/Interdigital_9.15.10.pdf
APNT gets $1.6 mill grant from DOE
AUSTIN, Texas, Sept. 16, 2010 (GLOBE NEWSWIRE) -- Applied Nanotech Holdings, Inc. (OTCBB:APNT - News) announced that it has been awarded a Phase III SBIR grant, in the amount of $1.6 million, from the US Department of Energy to establish a pilot production facility to manufacture and commercialize its proprietary ink materials for the application of metallic conductor layers on thin silicon solar cells.
This Phase III funding is part of the $57M Xlerator program to support Small Business and develop manufacturing processes and scale production of advanced technologies. The Phase III program will focus on the transition of technology related to photovoltaic compatible inks successfully demonstrated during a Phase II research Program into a pilot scale production. This funding provides a pathway to install the infrastructure needed for small capacity manufacturing of these highly specialized ink materials. The pilot facility is expected to be operational in 90-120 days.
The availability of non-contact printable ink materials will enable next generation thin-silicon cells to achieve volume production. Current cell manufacturing relies on screen-printing processes for the application of the metallic contacts. The applied pressure during the screen printing process can break or damage silicon wafers when their thickness is below 200 microns. There are efficiency gains and greatly reduced materials costs that are realized through the use of thin silicon wafers. A transition of wafer thickness to 100 microns can only be possible through the use of non-contact printing processes such as inkjet or Optomec's Aerosol Jet (R). ANI's ink materials, specifically its aluminum ink, are enabling materials for this technology transition. The use of non-contact printable materials can also provide a pathway to the production of advanced silicon solar cell architectures such as those required for interdigitated back contact solar cells.
"This Phase III grant will be a wonderful vehicle to help launch products for the fast-growing clean energy market. In addition to our previous recognition by R&D 100 for our copper ink, this grant is a wonderful validation of our nanoparticle ink technology," said Dr. Zvi Yaniv, CEO of Applied Nanotech, Inc.
"The grant will accelerate the commercialization of our inks for use in the solar cell industry," said Doug Baker, CEO of APNT. "It allows us greater control in the process of bringing a product to market and will allow us to generate additional revenues beyond the grant amount through the production and sale of inks."
Volume's running at almost 2000 shs/min. That's about double the 3 month average and almost 4 times what we've seen lately. Nice!
Sloan, We have averaged 1000 shs/minute (393k) over the last 3 months. As of now, we're closing at roughly 100k shares fewer today. IMO, we have very few Buyers today.
Android Is Poised to Be the Number Two Smartphone OS
http://seekingalpha.com/article/220233-android-is-poised-to-be-the-number-two-smartphone-os?source=email
Falcone’s LightSquared wireless venture is in advanced talks......
http://www.bloomberg.com/news/2010-08-02/falcone-s-mobile-venture-is-in-talks-to-lease-spectrum-lands-device-pacts.html
Falcone's Mobile Venture Is in Talks to Lease Spectrum, Lands Device Pacts
By Greg Bensinger - Aug 2, 2010 8:14 AM CDT Mon Aug 02 13:14:04 UTC 2010
Billionaire Philip Falcone’s LightSquared wireless venture is in advanced talks to lease its spectrum to U.S. technology companies and has reached agreements with device makers, Chief Executive Officer Sanjiv Ahuja said.
“We are talking to most of the wireless players,” Ahuja said in an interview in New York last week. “We want to serve every player in this industry, from the largest to the smallest,” including wireless, wireline and cable providers, as well as device makers and game manufacturers.
Ahuja’s efforts to build LightSquared into a business run counter to speculation by some analysts that Falcone would seek to sell his telecommunications assets. LightSquared gained most of its assets, including wireless spectrum, through its purchase of SkyTerra Communications Inc., completed this year.
The venture, backed by Falcone’s Harbinger Capital Partners hedge fund, is taking several steps towards becoming a new wireless competitor in the U.S. The company has agreements with several manufacturers to provide devices once it begins leasing its spectrum to partners, Ahuja said, declining to name them.
The venture will expand to 500 employees from about 350 now, said Ahuja, former head of France Telecom SA’s mobile unit.
Besides leasing spectrum, the Reston, Virginia-based venture also plans to build a wireless network and rent it to partners such as retailers and cable companies. Ahuja said he expects wireless demand in the U.S. to grow by 40 percent over the next four years as people use mobile devices to watch video and browse the Web.
“There is a massive demand-supply gap and it’s only going to get worse,” he said.
National Network
Analysts such as RBC Capital Markets Corp.’s Jonathan Atkin say the venture is most likely to sell its spectrum to a carrier, rather than continue to lease it over time.
“To start out from scratch and build out a network from the ground up is highly speculative,” Atkin said in an interview. “An established company has the resources and manpower to really make this work on a national scale.”
LightSquared said last month it awarded Nokia Siemens Networks a $7 billion deal to build and manage a so-called fourth-generation, or 4G, network. The network will combine terrestrial networks with coverage from two satellites.
Ahuja said LightSquared needs to raise more money beyond the initial $1.75 billion in commitments it announced last month. He said the goal is to create a national network to reach at least 260 million people in the next five years.
LightSquared will need to raise an additional $5 billion or more to build out the network, Piper Jaffray & Co. analyst Chris Larsen said in a research note.
Falcone “is a very savvy investor who knows that spectrum is a valuable asset and that the current carriers need more of it,” Larsen said. “This plan could pressure an incumbent into making a play for the assets.”
The company is on track to begin trials in Baltimore, Phoenix, Las Vegas and Denver by early 2011, Ahuja said.
To contact the reporters on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net
IMO, the MM's, (Master Manipulators,) are throwing just enough "Selling" ammo at us to peg the price under 27.
DETHPICABLE!!! (Was the duck's name, Daffy???)
Yep!!!!
Browse All Directories >>
InterDigital, Inc. (IDCC) After Hours Trading
Pre-Market Charts | After Hours Charts
Jul. 22, 2010 Market Close: $ 27.16
After Hours Last:
Net / % Change $ 27.18
.02 (.07%) After Hours High: $ 27.18
After Hours Volume: 70,207 After Hours Low: $ 26.14
Learn more about the After-Hours trading session.
Trade Detail
After Hours
Time (ET) After Hours
Price After Hours
Share Volume
16:23 $ 27.18 100
16:23 $ 27.18 512
16:22 $ 27.16 3,563
16:17 $ 26.14 54,544
16:11 $ 27.16 500
16:06 $ 27.1555 5,300
16:05 $ 27.1629 5,300
16:02 $ 27.16 100
16:02 $ 27.16 100
16:02 $ 27.16 188
Read more: http://www.nasdaq.com/aspxcontent/ExtendedTradingTrades.aspx?selected=IDCC&mkttype=after#ixzz0uRgzoAW3
QCOM - Up $1 in AH
Qualcomm Announces Third Quarter Fiscal 2010 Results
Revenues $2.7 Billion, EPS $0.47
Pro Forma EPS $0.57
Reports Record MSM Shipments; Raises Financial Guidance
SAN DIEGO — July 21, 2010 — Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the third quarter of fiscal 2010 ended June 27, 2010.
“Our financial performance this quarter exceeded our prior expectations, driven by record MSM chipset shipments, favorable product mix and continued strong demand for 3G devices around the world,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. “Looking forward, we continue to see healthy CDMA-based device growth of approximately 23 percent in calendar year 2010, and are raising both our revenue and earnings guidance for the fiscal year.”
Third Quarter Results (GAAP)
• Revenues: $2.71 billion, down 2 percent year-over-year and up 2 percent sequentially.
• Operating income: $792 million, down 11 percent year-over-year and up 2 percent sequentially.
• Net income: $767 million, up 4 percent year-over-year and down 1 percent sequentially.
• Diluted earnings per share: $0.47, up 7 percent year-over-year and 2 percent sequentially.
• Effective tax rate: 21 percent for the quarter.
• Operating cash flow: $951 million, down 13 percent year-over-year; 35 percent of revenues.
Qualcomm Announces Third Quarter Fiscal 2010 Results Page 2 of 17
• Return of capital to stockholders: $1.49 billion, including $309 million, or $0.19 per share, of cash dividends paid, and $1.18 billion to repurchase 32.4 million shares of our common stock.
Pro Forma Third Quarter Results
Pro forma results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain share-based compensation, certain tax items that are not related to the current year and acquired in-process research and development (R&D) expense.
• Revenues: $2.70 billion, down 2 percent year-over-year and up 1 percent sequentially.
• Operating income: $991 million, down 12 percent year-over-year and 7 percent sequentially.
• Net income: $936 million, up 4 percent year-over-year and down 5 percent sequentially.
• Diluted earnings per share: $0.57, up 6 percent year-over-year and down 3 percent sequentially. The current quarter excludes $0.07 loss per share attributable to certain share-based compensation and $0.03 loss per share attributable to certain tax items.
• Effective tax rate: 19 percent for the quarter.
• Free cash flow: $954 million, down 8 percent year-over-year; 35 percent of revenues (defined as net cash from operating activities less capital expenditures).
Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and pro forma results are included at the end of this news release.
ODog - Thanks for the correction. But why the h--- is my friend getting that kind of alert? And why is Yahoo showing a 79.98m concensus?
A friend just called and said that he just received revenue estimates of 81 to 83m on his iPhone - source CNBC ????? I have nothing on my Schwab streamer. Concensus on Yahoo is 79.98
M2M: Where WiMax Meets Lindsay Lohan
July 6, 2010 | Tim Kridel
What do Jeff Bezos and Lindsay Lohan have in common? They are two examples of how the definition of machine-to-machine (M2M) communications has broadened over the past two years.
M2M historically has been the province of only mundane applications, such as automated meter reading and tracking of everything from shipping containers to DUI offenders. The latter includes Lohan, whose court-ordered SCRAMx ankle bracelet alerts authorities when it detects her use of alcohol.
At the other extreme is the Amazon.com Inc. (Nasdaq: AMZN) Kindle, which debuted in November 2007 and began posting sales that indicated a mass-market opportunity for e-readers and similar devices, which now include the Apple Inc. (Nasdaq: AAPL) iPad. Today, myriad other devices and services – such as digital photo frames, digital cameras, and residential energy-management consoles – are categorized as M2M.
"Kindle was the inflection point," says Steve Pazol, president of nPhase, which has a joint venture with Verizon Wireless and Vodafone Group plc (NYSE: VOD) to target the M2M market. "M2M or not, it was one of the first special-purpose devices that people got, and all of a sudden, carriers said, 'I want to do that.' It opened their eyes."
But as detailed in a new research report from Heavy Reading Mobile Networks Insider, "M2M on the Rise: The Technology Perspective," humans and machines are fundamentally different in terms of their wireless needs, and understanding these differences is an important first step toward success in the new, broader M2M market.
For example, consumers and business users in developed markets are rapidly upgrading to 3G and WiMax in order to use bandwidth-intensive applications, while most M2M services – even video surveillance – work just fine on 2.5G. While humans typically replace their handset every 18 to 24 months, M2M applications frequently use the same module for five to 20 years. For example, 10 years is common in residential security, while automotive, trucking, and utilities modules often remain installed for 15 years.
That longevity affects technology choices. For example, some M2M users are concerned that carriers will start phasing out their 2G and 2.5G networks over the next few years to focus on 3G and 4G. This fear has a precedent: Several years ago, the two largest US carriers shut off their analog and cellular digital packet data (CDPD) services, and Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) closed its CDMA network in 2008 to focus on UMTS/HSPA. Today, a growing number of M2M users and their suppliers are considering upgrading to 3G technology simply because those networks are likely to remain in operation for at least another 10 to 15 years.
The different needs also show up in the sums that M2M users are willing to pay for hardware and connectivity. 2G and 2.5G technologies are widely used partly because they have had 10 to 20 years to ride down the cost curve, making them more attractive for price-sensitive M2M applications than 3G and WiMax. But WiFi and some private radio technologies have an even greater cost advantage, which is why they remain major players in M2M.
WiMax is emerging as a major force in M2M, for a couple of reasons. First, its newcomer status allays fears of 2G and 2.5G phaseouts, at least among M2M companies that are not equally concerned that many WiMax operators and vendors will defect to LTE. Second, WiMax is a good fit for bandwidth-intensive applications, such as two-way digital signage and in-vehicle infotainment.
One big drawback is that WiMax's geographic coverage in a given country – even the US – will remain spotty compared to 2G, 2.5G, and 3G for at least another two years. So for applications where the device is portable or mobile, WiMax requires a fallback technology – usually 3G – which drives up the cost of the module and service.
But for applications that do not need a fallback, WiMax is attractive because it is surprisingly cheap from a module perspective. At the end of 2009, single-mode WiMax chipsets – that is, with no other wireless technology as a fallback – cost about $20 in volume. Some chipset vendors expect prices to drop to $12-$14 by the end of 2010.
Add in the rest of the hardware required to create a module, and WiMax costs about $35-$40 in volume. By comparison, a GSM/GPRS module goes for about $25, while CDMA 1X runs $50-$55. HSPA costs about $85.
Some in the industry might be surprised by the competitive price of WiMax modules, if only because the technology is relatively new and thus has not had a decade or more to build volumes. One reason the price is already so low and falling is that WiMax does not have the burden of royalty payments to companies that have patented certain aspects. For some rival technologies, that royalty can be 5 percent.
The catch is that no one is sure how long WiMax will enjoy this advantage. Many companies have intellectual property (IP) for WiMax but have not yet pursued royalties, perhaps because the market isn't big enough yet to translate into a lot of money.
"I wouldn't be surprised if at some point, those companies say: 'I've got a lot of IP in them. I should be compensated,'" one WiMax chipset vendor says privately. That's something everyone from investors to M2M end users should keep in mind when assessing WiMax.
The upshot is that as the M2M market expands, so does the number of technologies and companies competing for a piece of the action. But one thing hasn't changed: The choice often comes down to price.
Magilla, Just in case some of these names aren't recognized, here's a 2009 License chart courtesy of DRox.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=44102435
SK Telecom Is in Talks to Offer iPhone, iPad in Korea (WSJ)
http://online.wsj.com/article/SB10001424052748704535004575348551003805786.html?mod=dist_smartbrief
Supply Chain for iPhone Highlights Rising Costs in China (see Bold on Infineon)
Published: Tuesday, 6 Jul 2010 | 3:34 AM ET
By: David Barboza
Last month, while enthusiastic consumers were playing with their new Apple iPhone 4, researchers in Silicon Valley were engaged in something more serious.
They cracked open the phone’s black plastic shell and started analyzing the new model’s components, trying to unmask the identity of Apple’s main suppliers. These “teardown reports” provide a glimpse into a company’s manufacturing.
What the latest analysis shows is that the smallest part of Apple’s costs are here in Shenzhen, where assembly-line workers snap together things like microchips from Germany and Korea, American-made chips that pull in Wi-Fi or cellphone signals, a touch-screen module from Taiwan and more than 100 other components.
But what it does not reveal is that manufacturing in China is about to get far more expensive. Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, and inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones.
Desperate factory owners are already shifting production away from this country’s dominant electronics manufacturing center in Shenzhen toward lower-cost regions far west of here, even deep in China’s mountainous interior.
At the end of June, a manager at Foxconn Technology — one of Apple’s major contract manufacturers — said the company planned to reduce costs by moving hundreds of thousands of workers to other parts of China, including the impoverished Henan Province.
While the labor involved in the final assembly of an iPhone accounts for a small part of the overall cost — about 7 percent by some estimates — analysts say most companies in Apple’s supply chain — the chip makers and battery suppliers and those making plastic moldings and printed circuit boards — depend on Chinese factories to hold down prices. And those factories now seem likely to pass along their cost increases.
“Electronics companies are trying to figure out how to deal with the higher costs,” says Jenny Lai, a technology analyst at CLSA, an investment bank based in Hong Kong. “They’re already squeezed, so squeezing more costs out of the system won’t be easy.”
Apple can cope better than most companies because it has fat profit margins of as much as 60 percent and pricing power to absorb some of those costs. But makers of personal computers, cellphones and other electronics — including Dell, Hewlett-Packard and LG — deal with profit margins of 2 to 5 percent, according to several analysts. “The challenges are going to be much bigger for them,” Ms. Lai said. Most other industries, from textiles and toys to furniture, are under considerably more pressure.
One way to understand the changes taking shape in southern China is to follow the supply chain of the iPhone 4, which was designed by Apple engineers in the United States, sourced with high-tech components from around the world and assembled in China. Shipped back to the United States, the iPhone is priced at $600, though the cost to consumers is less, subsidized by AT&T in exchange for service contracts.
“China makes very little money on these things,” said Jason Dedrick, a professor at Syracuse University and an author of several studies of Apple’s supply chain. Much of the value in high-end products is captured at the beginning and end of the process, by the brand and the distributors and retailers.
According to the latest teardown report compiled by iSuppli, a market research firm in El Segundo, Calif., the bulk of what Apple pays for the iPhone 4’s parts goes to its chip suppliers, like Samsung, Toshiba and Broadcom, which supply crucial components, like processors and the device’s flash-memory chip.
In the iPhone 4, more than a dozen integrated circuit chips account for about two-thirds of the cost of producing a single device, according to iSuppli.
Apple, for instance, pays Samsung about $27 for flash memory and $10.75 to make its (Apple-designed) applications processor; and a German chip maker called Infineon gets $14.05 a phone for chips that send and receive phone calls and data. Most of the electronics cost much less. The gyroscope, new to the iPhone 4, was made by STMicroelectronics, based in Geneva, and added $2.60 to the cost.
The total bill of materials on a $600 iPhone — the supplies that go into final assembly — is $187.51, according to iSuppli.
The least expensive part of the process is manufacturing and assembly. And that often takes place here in southern China, where workers are paid less than a dollar an hour to solder, assemble and package products for the world’s best-known brands.
No company does more of it than Foxconn, a division of the Hon Hai Group of Taiwan, the world’s largest contract electronics manufacturer.
With 800,000 workers in China alone and contracts to supply Apple, Dell and H.P., Foxconn is an electronics goliath that also sources supplies, designs parts and uses its enormous size and military-style efficiency to assemble and speed a wide range of products to market.
“They’re like Wal-Mart stores,” Professor Dedrick said. “They’re low-margin, high-volume. They survive by being efficient.”
The world of contract manufacturers is invisible to consumers. But it’s a $250 billion industry, with just a handful of companies like Foxconn, Flextronics and Jabil Circuit manufacturing and assembling for all the global electronics brands.
They compete fiercely on price to earn small profit margins, analysts say. And they seek to benefit from tiny operational changes.
When a company is operating on the slimmest of profit margins as contract manufacturers are, soaring labor costs pose a serious problem. Wages in China have risen by more than 50 percent since 2005, analysts say, and this year many factories, under pressure from local governments and workers who feel they have been underpaid for too long, have raised wages by an extra 20 to 30 percent.
China’s currency has also appreciated sharply against the United States dollar since 2005, and after a two-year pause by Beijing, economists expect the renminbi to rise about 3 to 5 percent a year for the next several years.
“It takes 3,000 procedures to assemble an H.P. computer,” says Isaac Wang, an iSuppli analyst based in China. “If a contract manufacturer can find a way to save 10 percent of the procedures, then it gets a real good deal.”
Contract manufacturers like Foxconn are now searching for ways to reduce costs. Foxconn is considering moving inland, where wages are 20 to 30 percent lower. The company is also spending heavily on manufacturing many of the parts, molds and metals that are used in computers and handsets, even trying to find larger and cheaper sources of raw material.
“We either outsource the components manufacturing to other suppliers, or we can research and manufacture our own components,” says Arthur Huang, a Foxconn spokesman. “We even have contracts with mines which are located near our factories.”
Many analysts are optimistic the big brands will find new innovations to improve profitability. But within the crowd, there is growing skepticism about China’s manufacturing model after years of pressing workers to toil six or seven days a week, 10 to 12 hours a day.
“We’ve concluded Hon Hai’s labor-intensive model is not sustainable,” says Mr. Wang at iSuppli Research. “Though it can keep hiring 800,000 to one million workers, the problem is these workers can’t keep working like screws in an inhuman system.”
This type of low-end assembly work is also no longer favored in China, analysts say, because it does not produce big returns for the companies or the country. “China doesn’t want to be the workshop of the world anymore,” says Pietra Rivoli, a professor of international business at Georgetown University and author of “The Travels of a T-Shirt in the Global Economy.”
“The value goes to where the knowledge is.”
- Chen Xiaoduan contributed research.
Magilla, Help me here.... Gemalto acquires an existing licensee, Cinterion. They in turn start mixing it up with other licensees; Infineon, Option, etc. My question is, Does Gemalto pay us royalties on a: Only the Cinterion related activities/products?, b: Gemalto and Cinterion products that have communal/overlapping activities/products?, c: Nothing, until they cut their own deal with IDCC?, d: Other???
Your posts collectively, touch on a lot of related branches in the M2M tree and potentially, billions of devices. I'd appreciate it if you, or revlis, ODog, or others could pontificate a bit on what's a "Given," and what's perhaps, in store for us?
Great article from Postyle...
Posted by: postyle Member Level Date: Thursday, July 01, 2010 2:09:52 PM
In reply to: None Post # of 292170 Send a link via email Share on Facebook Tweet this post
Interdigital (IDCC): Selling 'Know-How' In Wireless
By: TheStockAdvisors.com Thursday, July 01, 2010 1:47 PM
Louis Basenese, editor White Cap Report
The amount of data being transmitted over mobile networks is exploding. Cisco estimates that global mobile data traffic will jump 39 times the current usage by 2014. The only rub? The networks aren't equipped to handle such a massive influx. Not even close.
A bandwidth crunch is looming just on the horizon, threatening to cripple any network caught with its pants down. And that's where our newest recommendation – InterDigital, Inc. (IDCC) – comes in.
To say InterDigital invented wireless technology is no exaggeration. After 37 years in business, its inventions are now used in every digital cell phone. So why haven't you heard of it, given such broad market penetration?
That's simple. The company doesn't manufacture a single product. Instead, it sells "know-how." Or more specifically, it licenses patents for its critical wireless technologies to the biggest players in the market, including Samsung, BlackBerry, HTC and Apple.
We're not talking about a few patents here, either. At the end of 2009, the company held 1,242 U.S. patents and 5,996 non-U.S. patents. And there's no threat of this asset base being depleted, like an oil producer that keeps sucking more and more of its reserves out of the ground. To the contrary, it keeps growing.
Last year alone the company added 187 U.S. patents and 1,048 non-U.S. patents to its portfolio. Tack on the 10,213 patent applications currently in queue and InterDigital's a virtual patent factory.
We have the company's founder, Sherwin Seligsohn, to thank for such a unique business model. In the late 1960s he envisioned a communications system that would allow him to trade stocks while sitting on the beach. Since no such technology existed, he founded a company to make this idea a reality.
Before long, his company developed inventions that were light years ahead of mass-market adoption and commercialization. Yet, as a small company, InterDigital didn't possess the financial resources to create market demand.
So management decided to secure patents on its technologies, put them on the shelf and move on to the next innovation. Once the market caught up, the company cashed in on its intellectual property via licensing fees.
This same business model remains intact today. InterDigital invests heavily into research and development. Once its engineers develop a breakthrough, an army of lawyers steps in to patent it and defend it vigorously.
What makes InterDigital particularly attractive now is the fact that management is dead-set on being part of the solution to the bandwidth crunch. In fact, early last year they made it a key focus. The company's attacking the opportunity from three angles: creating technologies for spectrum optimization, cross network connectivity and intelligent data delivery. Or, as the company puts it for us simpletons, "Bigger pipes, more pipes and better pipes."
I'll be the first to concede that InterDigital employs an unorthodox business model. That's probably why so few analysts follow the company. But boy are they making a mistake. A quick review of the fundamentals proves the unique approach is paying off in spades.
In the most recent quarter, sales jumped 65% and earnings more than tripled. Free cash flow hit $65 million, further bolstering the company's pristine balance sheet. InterDigital sports no debt and has almost $500 million in the bank. And return-on-equity checks-in at an eye-popping 93%. Best of all, shares are cheap, trading at a price-to-earnings ratio of eight. That's a 59% discount to the average stock in the S&P 500.
I'm convinced that InterDigital's new focus on network optimization will pay off handsomely. Management already tipped us off to the progress when it raised second-quarter sales guidance. It's time we slap a White Cap label on this stock and get onboard before mobile data traffic – and InterDigital's patent business – really ramps up.
Action to Take: Buy InterDigital at market and use a 50% trailing stop to protect both your principal and profits. And limit the position size to no more than 1% of your total portfolio.
http://www.istockanalyst.com/article/viewarticle/articleid/4269959
ODog, If I were IDC, I'd have my M2M team sitting in Gemalto's conf room right now, showing the presentation contained in your attachment. And every slide would be hilited with how IDC can contribute and enhance the Gemalto/Cinterion offerings with our latest patent developments.
I'm positive they're doing just this, In addition to counting the new $ from SAM. LOL
Looks like Verizon has it's own "Feet of Clay."
Is Verizon Wireless Making It Harder to Avoid Charges?
By DAVID POGUE
Published: June 17, 2010
http://www.nytimes.com/2010/06/17/technology/personaltech/17pogue-email.html?ref=personaltechemail&nl=technology&emc=cta1
As longtime readers know, I think the cellphone industry is one step away from a big-city mugger. Some of their practices are outrageous ripoffs-like how they charge so much for text messages (both the sender and the receiver), even though text messages cost them nothing. Or how the purpose of two-year contract is to sell you an expensive phone cheaply, on the premise that you'll pay it off over the next 24 months-but once you've paid off the phone, your monthly bill doesn't go down. (Except at T-Mobile.)
Verizon Wireless, Atkinson Studios
Verizon drew criticism for making phones where it was easy to access the Internet accidentally.
A few months ago, I wrote about Verizon Wireless's outrageous practice of selling phones whose arrow keys are preprogrammed to connect to the Web-and if you hit one accidentally, you get zapped with a $2 Internet charge, instantly.
After much outcry and even an FCC investigation, Verizon Wireless installed a "landing page"-a page on the phone that lets you cancel before you incur the charge. But plenty of people still find those mysterious $2 charges. If you truly never use Internet features, you can call Verizon to request a "data block"-to say, "I just don't use the Internet on my phone, and I don't want to run the risk of getting hit with those $2 charges."
Last month, I heard from a customer-service rep who, despite working for Verizon Wireless, is on my side on this issue. He wrote with two alarming internal developments at Verizon that could affect you:
"Effective this past month, all CSRs [customer-service reps} were versed on the usage of blocks. A new policy has gone into effect regarding how to handle Escalated Calls regarding data charges. Now, a representative can be reprimanded and even terminated for proactively offering to block any of the following:
* Web Access Blocks
* Data Blocks
* Premium SMS blocking
* Application download blocking
* Vcast Music or Vcast Video download blocks
"Essentially, we are to upsell customers on the $9.99 25mb/month or $29.99 unlimited packages for customers. Customers are not to be credited for charges unless they ask for the credit. And in cases such as data or premium SMS, where the occurrences may have gone months without the consumer noticing, only an initial credit can be issued."
I asked Brenda Raney, a Verizon Wireless spokeswoman, about this. She replied two different ways.
First, she flatly denied that a customer service rep can be fired for suggesting a data block. "We train our representatives to solve our customers' problems. If a customer calls and indicates to a representative that a data block would solve his or her problem, the representatives can and should suggest a data block, and we train them to do that."
Well, that's good. But she went on to say: "Many customers request data blocks to prevent children from downloading applications, music, etc., that could significantly affect their bills. We have been training and encouraging the representatives to step customers through the services that will be affected by data blocks to make sure customers really want a total block, or if they would be better served by going to My Verizon (the online free account portal) and customizing their usage themselves by removing features they don't need. We haven't helped the customer if we put a data block on their phone only to have them call back because they didn't realize it would stop them from downloading a ringtone, for example."
So who's right? Maybe both my rep and the spokeswoman are correct: that you're really going to have to insist if you want data blocks put on your line. Verizon Wireless will try even harder than before to upsell you, to talk you out of the data blocks.
As for giving you credit for accidental charges, Verizon Wireless reports: "While we want the representatives to work with customers, and in appropriate cases, credit their accounts, we also ask that representatives encourage customers to move to plans that matches their usage needs. We don't want customers to go over their usage every month, and then call us looking for credits every month."
It seems true, then, that it will be tougher than before to get credited for accidental charges; the burden is on you to monitor the My Verizon Web site to track your own usage.
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Apple, AT&T Cite Record iPhone Sales
http://online.wsj.com/article/SB10001424052748704198004575310712288028500.html?mod=dist_smartbrief
Apple Inc. said it took advance orders for more than 600,000 new iPhones world-wide on the first day the device became available, a flood of demand that caused difficulty processing orders at U.S. carrier AT&T Inc.
AT&T has suspended pre-orders of Apple's iPhone 4 after the phone giant was unable to handle record demand for the product. Apple said it sold more than 600,000 on its first day of availability. Roger Cheng has details.
Apple said the preorders were the most ever taken by the company in a single day, and 10 times higher than for the iPhone 3GS last year. It added that the crush resulted in a number of "order and approval system malfunctions" and apologized to frustrated customers.
AT&T said Wednesday it had stopped taking advance orders for the smartphone, as record demand sapped its inventory.
The suspension came a day after AT&T's paralyzed website left many would-be buyers unable to reserve the new iPhone and inadvertently sent some customers into other people's account pages.
"Many customers were turned away or abandoned the process in frustration," Apple said in a statement. "We apologize to everyone who encountered difficulties."
Editors' Deep Dive: iPhone Rivals Battle for Share
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AT&T said it might resume taking preorders before the June 24 launch, depending on inventory. Wednesday afternoon, Apple's website showed that customers who preorder the iPhone 4 will receive their phones on July 14.
Analysts have been expecting the new model to help Apple sell about 36 million iPhones in the year ending in September, up about 73% from 20.8 million a year earlier.
Gene Munster, an analyst with Piper Jaffray & Co., took the latest disclosure as a positive sign of the healthy demand for the iPhone 4.
"We were not expecting anything close to this for preorders," he said, adding that Apple likely will lose only a few customers as a result of the delay.
AT&T released no new details on its inquiry into reports that some customers had inadvertently gained access to others' account information while trying to preorder Tuesday.
"We're looking into the matter," an AT&T spokesman said. "At this point, any suggestion about what happened is pure speculation."
Ron Bello, of Natick, Mass., said Wednesday he suffered an account mixup when he reserved his iPhone at an AT&T store Tuesday. The 56-year-old salesman got a confirmation email with a link to check his order details.
When he clicked on it, he saw his order in his account, but also a year-old iPhone order for another customer along with that customer's name, town and signature. "It was kind of comical," Mr. Bello said.
AT&T said its website was visited more than 13 million times Tuesday by customers checking to see if they were eligible to upgrade to a new phone, about three times the amount of traffic on the previous one-day record for eligibility checks.
Associated Press
Apple said the preorders for the iPhone 4 were the most it ever took in a single day. Above, people in line at an Apple store in Tokyo on Tuesday.
Since launching three years ago, the iPhone has become Apple's largest business, accounting for more than 40% of its revenue. According to research firm IDC, Apple is currently the third-largest smartphone maker in the world with a 15.8% share behind Nokia Corp. and Research In Motion Ltd. On Wednesday, Nokia warned of weak sales.
Apple, which meticulously plans its product launches, has had an unusual amount of problems related to the iPhone 4. Though it usually likes to surprise consumers with its new products, the impact of its latest phone was diminished this year by details that were revealed in April by Gawker Media's Gizmodo technology blog, which got its hands on an iPhone prototype that was found at a Silicon Valley bar.
Apple also continues to suffer a shortage of supply of iPads, which are still on backorder in Apple's stores and website two months after it started selling.
NJ, A few weeks back, we were averaging about 1000shs/minute. Or, roughly 450k to 500k traded/day. What's going on lately with less than 50% of that volume in play, is, IMO, a reflection of the absence of news from the company.
If, as reported here, our BOD is sensitive to our "undervalued" share price, it would seem that a much more aggressive PR strategy would sure go a long way to boost the Street's interest in our stock.
iPhone 4 at Wal-Mart on June 24
http://news.cnet.com/8301-31021_3-20007457-260.html?tag=mncol
iPhone 4 goes on sale June 24.
(Credit: James Martin/CNET)
If you'd rather avoid the lines at Apple and AT&T stores on iPhone 4 launch day, you have options this year.
Wal-Mart said Friday that it will be one of several retail outlets that will have the iPhone 4 on June 24, its first day of availability anywhere. While Wal-Mart has carried previous versions of the iPhone, this is a first that it will be for sale in its stores on the device's official launch day.
Wal-Mart is not the only alternative to Apple and AT&T, however. It's rumored that Best Buy will have the device on launch day, and Radio Shack employees have begun telling customers they have also been selected to carry the device starting June 24.
It could be a sign of Apple's growing relationship with fellow electronics retailers that it is sharing the launch day spoils. Or, it could be the realization that demand for the iPhone is strong and it wants to offload at least some of the typical crush of people going to stores to buy it the first day.
Apple said on Monday that pre-orders for iPhone 4 will start on June 15. Wal-Mart will be not be offering the same pre-order option.
This post was updated at 10:08 a.m. PDT with Walmart's confirmation that it will not be doing preorders.
I just listened twice to the Merritt presentation at the UBS Conf this week. It's one of the better presentations I've heard him make.
IMO, it's probably a factor in the "buying" bias we've seen in the last few days.
Below is a note I sent to the friends and relatives I've gotten into our stock.
"This is a great 20 minutes for you. CEO, Bill Merritt, explains the company and the business in easy to understand terms. Then tells us where the future of the company is headed.
This is a 'must listen.'"
Jim
Date: Fri, Jun 11, 2010 at 2:07 PM
Subject: IDCC Conference
http://cc.talkpoint.com/ubsx001/060810a_cy/?entity=51_I004PWD
Dozer, I like it a lot, and offer a second to the idea.
Apple's Yellow Brick Road (Could our MIH come into play here? See bold)
http://www.cnbc.com/id/37539520
Published: Sunday, 6 Jun 2010 | 1:35 PM ET
By: Jim Goldman
CNBC Silicon Valley Bureau Chief
As Apple prepares to host thousands of developers wandering their way along Apple's Yellow Brick Road to it its Worldwide Developers Conference in San Francisco this week, it does so at one of—if not THE—most fortunate times in the company's colorful history.
(Check back here on Monday beginning at 1 pm EDT when I'll be live-blogging the Steve Jobs keynote!)
And Steve Jobs will be the first to tell his developers: Now is the time to work even harder so this incredible momentum isn't squandered, and laurels don't become a comfortable place to rest your weary thumbs. The pressure is on Apple to keep expanding its universe while not angering those responsible for its growth.
And developers are the key to Apple's story right now.
The company faces several controversies, including the war of words with Adobe over Flash, and concerns that Apple [AAPL 255.965 -7.155 (-2.72%) ] is exerting too much control over what is and isn't included in the company's App Store, and whether that control somehow runs afoul of federal anti-trust laws; and Apple's heavy hand in trying to protect its own intellectual property by pressuring law enforcement to follow up on what could be illegal activity when it comes to the Gizmodo blog and the possibly stolen iPhone prototype.
Amid it all, Jobs exerts a kind of reasonableness that bears a close look-see.
Why? Well, mainstream media and Apple critics will tell you that Apple's maniacal regime is too overbearing and the company runs the risk of a public relations nightmare that threatens to derail everything Apple is about, including its stock price.
And all of that might indeed be a risk, but reality spells a far different story: Apple's App Store boasts well over 200,000 apps today, 5,000 or so designed specifically for the new iPad. Seems developers don't really mind that lack of Flash.
Apple's sold 2 million iPads in about two months, despite all that coverage about the lack of Flash, so it seems consumers don't care all that much. iPhone, sans Flash, continues to sell exceptionally well, too, by the way. Even Microsoft [MSFT 25.79 -1.07 (-3.98%) ] and Google [GOOG 498.72 -6.88 (-1.36%) ], no fans of Apple to be sure, have both at various times and various levels, agreed with Apple on Flash.
Regarding that blogger and the iPhone prototype: Apple ought to go after them. If you want to chance breaking the law in going after a story, and you think it's worth it to do so, then fine. But don't cry foul after the fact, once you're caught!
Oh, and as far as investors are concerned, in the midst of all this hand-wringing, and bad press about Apple's totalitarianism, shares are near a record high, and its market cap has exceeded rival Microsoft's.
When it comes to bad PR and its affect on the overall Apple story: Mountain, meet the mole hill.
But going back to that rest and laurels thing I mentioned at the top: All of these headlines are not subtle reminders of just how steep the competition is right now in all things portable technology. Apple isn't standing still.
The things I'm expecting Monday: Obviously that new 4G iPhone.
Jobs hinted at the All Things Digital conference last week that wireless sharing of your digital media from one Apple device to another may also be in the cards. The wildcard is an iPhone deal with Verizon.
Increased chatter and buzz suggests this is more a possibility today than it has been in the past. This is like one of those Homeland Security warnings that something may be imminent based on "chatter," even though there's no hard-and-fast facts about the exact specifics. In other words, don't be surprised if it actually gets announced Monday.
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Other things to watch for on Monday: Jobs and his possible rhetorical counter-punches to Google CEO Eric Schmidt and the pot shots he lobbed against Apple during the unveiling of GoogleTV last month. That could be fun!
Fact is, the smart phone market is still white hot, and there's plenty of room for multiple winners with this kind of growth. A lot is made of the marketshare horserace between Apple and Google (just Friday, Nielsen reported that iPhone OS marketshare is three times the size of Android, by the way), but Research in Motion [RIMM 59.68 -1.97 (-3.2%) ] and Microsoft aren't going away any time soon. They're all growing, some faster than others, but this is one big pie!
Everyone is spending a huge amount of effort looking for Apple weak spots. Not that difficult, really. Like Jobs said last week about consumers and Apple products: "If they like them, we get to come to work tomorrow."
Nobody forces consumers to buy Apple products (get that, Feds?). And nobody forces developers to create for the Apple platform.
If they're smart, and they usually are, they'll go where the market is (fish where the fish are, ski where the snow is, swim where the water is), and the market is in the Apple community. If they don't like it, if they don't like Apple's rules, or control, they'll go elsewhere.
Trouble for Apple competitors is, consumers and developers aren't doing that. They're choosing Apple. By the millions. Still.
Trouble for Apple competitors, certainly, but music to the ears of Apple investors.
Spreadtrum: A Nice Tech Chip Shot
http://seekingalpha.com/article/207520-spreadtrum-a-nice-tech-chip-shot?source=email
Spreadtrum (SPRD) is a semiconductor company that designs, develops and markets baseband processor solutions for the wireless communications market. Spreadtrum combines its semiconductor expertise with its software development capabilities to deliver highly-integrated baseband processors with multimedia functionality and power management.
Wall Street has discovered this stock and has 5 buy and 2 hold recommendations published. Sales and earnings projections are off the chart with sales expected to increase 146.90% this year and 23.60% next year. Earnings are a similar story with estimates of increases in EPS to be 311.60% this year 18.70% next year and continue at an annual rate of 20.00% for the next 5 years. I like these numbers.
Investor sentiment is beginning to build with the CAPS members on Motley Fool voting 180 to 29 that the stock will beat the market and a similar vote is registered by the All Stars vote of 47 to 6.
The data on Barchart shows that this is a current momentum play with 12 new highs in 20 trading sessions and 4 new highs in the last 5 days. The monthly return on this stock has been 70.03%. All of Barchart's 13 technical indicators signal a buy for a 100% buy score.
I think this stock still has some room to run because:
* Wall Street predicts double digit sales and earnings to continue
* The stock is just beginning to build a positive investor sentiment
* Each day the stock has increases in price appreciation
Disclosure: No positions in SPRD at the time of publication
About the author: Jim Van Meerten
Mobility Craze Will Carry Tech Rally Past 2010
Published: Friday, 28 May 2010 | 12:10 PM ET
By: John Moore,
Special to CNBC.com
Whether it’s products like the Kindle and the iPhone, or the technology that powers those products, mobility is the key driver for the technology sector these days.
While the trend has been largely a consumer-based one to date, analysts expect the focus to shift to large businesses as they ramp up their IT spending in the second half of the year.
“There are many different facets to the tech recovery that will be kicking in over the next couple of months,” says Louis Miscioscia, senior analyst at Collins Stewart. “We might be getting into a very nice period for tech where we see sustained growth for multiple years.”
Mobile Movers
Right now, the demand for mobility is what’s moving technology stocks.
“If you look at engagement curves, it used to be just the desktop,” says Gene Munster, senior research analyst at Piper Jaffray. “As the hardware gets better, people are using mobile more. The hardware guys are moving at lightning speed to have better mobile products, and the Internet guys are trying to optimize mobile.”
In less than three years Apple [AAPL 256.10 2.75 (+1.09%) ] has become the hottest name in mobile devices. Munster notes that Apple’s mobile revenue has gone from zero in 2007 to a projected 44 percent of its business in 2011.
“These are massive shifts in their business model,” he says. “The iPhone alone will be 44 percent of total sales in 2011. If you add on top of that the iPad you get to over 50 percent. That’s about $25 billion to $30 billion in total sales over a four-year time frame.”
* Apple iPad Frenzy Spreads Abroad
* iPhone Maker Foxconn Hit By 10th Jumping Death
* Novell Adjusted Profit Slides
Apple’s meteoric rise in this space is hard to duplicate. But Munster notes that some of the biggest names in the tech sector are focusing on mobile strategies for incremental growth.
“If you look at eBay [EBAY 21.48 -0.43 (-1.96%) ], they did about 4 percent of their business on the iPhone last quarter,” Munster says. “They’re small numbers, but they’re growing quickly. We think in the next three years that can go to 10 percent.”
And while growth in online search in the United States and Western Europe is on the decline, according to Munster, Google [GOOG 485.50 -4.96 (-1.01%) ] is setting its sights on mobile technology for new revenue streams.
Google’s Android operating system gives the company exposure in the rapidly growing smartphone market. It's 2009 acquisition of mobile advertising network AdMob—recently OK'd by the Federal Trade Commission—will help leverage its cash cow, Google AdWord, into the mobile arena.
Google, however, isn’t the only company expecting big things from mobile advertising. Earlier this year, Apple purchased Quattro Wireless, an AdMob competitor, and plans to introduce its own mobile advertising platform for iPhone apps called iAd.
“We estimate that 2 percent of [Google’s] business is mobile,” Munster says. “But in the next three years mobile can go from 2 percent to 6 percent.”
Connectivity is King
Demand for mobile devices is also providing a boost for semiconductor companies focused on wireless communications, according to Gary Mobley, analyst at Benchmark Company.
Mobley notes that Broadcom [BRCM 34.33 -0.01 (-0.03%) ] and Atheros Communications [ATHR 34.17 -1.54 (-4.31%) ], which make chips for Wi-Fi, Bluetooth, and GPS functionality in mobile devices, both have room to grow.
“Connectivity is becoming a much needed feature for cell phones,” Mobley says. “There are many carriers out there who want to offload phone conversations from their cellular networks, when possible, to a Wi-Fi network. Last year only about 9 percent of cell phones sold globally had Wi-Fi connectivity. Looking over the next four or five years, that will rise to over 40 percent.”
With smartphones quickly becoming a mainstream consumer device, the amount of mobile data consumed is on the rise. John Bright, communications technology analyst at Avondale Partners, recommends investors look at companies with a pure-play focus in specific areas of mobile data usage.
“Syniverse Technologies [SVR 20.00 -0.26 (-1.28%) ] is a direct beneficiary of that because they handle roaming for mobile data,” Bright says. “Anytime subscribers access the Internet in a roaming environment, Syniverse stands to benefit. Not only because of the data sessions, but the sending of text messages, picture mail, and videos are unit increases for Syniverse.”
Earlier this month, Syniverse reported a 37-percent bump in its first-quarter revenue, driven largely by an increase in its roaming business.
Bright also maintains a “market outperform” rating on Nuance Communications [NUAN 17.20 0.12 (+0.7%) ] , which provides speech recognition for mobile devices. In a note sent to investors on Monday, Bright said that as smartphone shipments continue to grow, opportunities for speech-driven search will grow along with it.
Still Waiting for the Enterprise
Late last year, analysts expected enterprise IT spending to improve. Louis Miscioscia from Collins Stewart says that while smaller businesses have stepped up, larger companies have remained on the sidelines as the economy continues its mood swings.
“Small and medium businesses started to kick in its spending on IT in the fall,” Miscioscia says. “If you go back to ’08, SMBs were the first ones to fall off, but they were also the first ones to bounce back. They’re in a hardware refresh cycle. A lot of the products these companies use— servers, PCs, storage, and networking gear—have all aged.”
Miscisocia says that while large corporations have been more cautious, signs of economic stability should result in a corresponding increase in IT spending.
“As the economy continues to do well, companies will look to invest back in their business, and IT is a capital investment,” he says. “We’re starting to see some signs of them getting interested in spending money on IT, but it’s more of a second half story.”
Until then, Miscioscia recommends investors focus on companies with a diversified customer base.
“HP [HPQ 46.35 -0.59 (-1.26%) ] gets a third of their revenue from consumers, a third from SMBs, and a third from large corporations,” he says. “So today, two-thirds of their revenue has seen decent growth. They had 5 percent organic growth last quarter, which is pretty good for a $100 billion-plus company. We could see revenue growth better than that as the economy continues to do well.”
(Editor's note: Piper Jaffray makes a market in the securities of Apple, eBay and Google.)
Nortel May Raise as Much as $1.1 Billion From Patent Sales
By Hugo Miller - May 26, 2010
RIM co-Chief Executive Officer Mike Lazaridis has referred to Nortel's LTE technology as a "national treasure".
Nortel Networks Corp., the insolvent Canadian phone-equipment maker, may get as much as $1.1 billion for technology patents that analysts say would benefit potential bidders including Research In Motion Ltd.
The Toronto-based company has about 4,500 patents granted and more than 1,000 applications for designs pending, according to U.S. Patent and Trademark Office data, said Peter Conley of MDB Capital Group LLC, who estimated their value. They would be a “natural fit” for BlackBerry maker RIM, he said.
“Patent estates of this size don’t come along that often,” said Conley, who is managing director of Santa Monica- based MDB, an investment bank specialized in intellectual property. “This is the equivalent of acquiring the IP of a large technology company. If you could buy that for a billion dollars, it would be a bargain.”
Nortel’s patents would give buyers technology used in wireless networks that support data-hungry smartphones like Apple Inc.’s iPhone. A sale would add to the more than $2.8 billion Nortel has raised from selling assets in bankruptcy and be a boon to creditors, said Ehud Gelblum, a New York-based Morgan Stanley analyst.
“Creditors would be tickled pink to get $1.1 billion,” Gelblum said in a telephone interview. “I don’t think they would have expected Nortel to generate $4 billion” from asset sales.
Nortel said this month it has started soliciting bids for the patents. The company is assessing how to “maximize the value” of the patents and is talking to a “wide range” of companies to determine their interest, said Jamie Moody, a Nortel spokeswoman, declining to identify them. RIM has no comment, said Marisa Conway, a spokeswoman for the company.
Last Assets
Nortel filed for bankruptcy protection in January 2009 after posting a loss of $5.8 billion in 2008. The company has since auctioned off businesses, and the patents are among the last assets left, according to court papers. Nortel has yet to file a plan for paying creditors. Company attorneys have said in court that they don’t expect any of its primary businesses to exit bankruptcy.
Creditors said they are owed as much as $16.3 billion, according to court records, a figure the company will challenge as part of its bankruptcy case. Nortel said in court papers it owes about $5.9 billion. In bankruptcy, the final debt figure is typically lower than what is initially claimed after a judge eliminates duplicates and illegitimate debts.
Bonds Rise
General unsecured claims, such as debts owed to suppliers, are trading at about 50 cents on the dollar, said Andrew R. Gottesman, a vice president with SecondMarket Inc., a private exchange of illiquid assets such as bankruptcy debt.
Nortel Networks 10.75 percent callable bonds maturing in July 2016 rose 1.5 cents to 79.5 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
“The chances are very small creditors will get it all back,” said Ed Ketz, a professor of accounting at Pennsylvania State University. “They may get 60 cents on the dollar but of course we don’t know what the number will be until the judge decides.”
Even with a discount to account for Nortel’s insolvency, the patents are worth $750 million to $1.1 billion, said Conley, the intellectual-property banker. His valuation is based on an estimate for types of patents, multiplied by the number in the portfolio and discounted for the age of the patents.
Scott McKeown, a patent lawyer with Oblon, Spivak, McCLelland, Maier and Neustadt in Alexandria, Virginia, said a sale price of at least $750 million for the patents is reasonable, especially as they include Nortel’s Long Term Evolution, or LTE, technology for the newest wireless networks, called fourth generation.
‘Pretty Conservative’
“For that number of patents and assuming that a hundred of them are 4G, that number may actually be pretty conservative,” McKeown said in an interview.
Nortel has yet to decide whether a sale, licensing, some combination of the two or another alternative is the best decision, said spokeswoman Moody. She declined to comment on how many LTE patents Nortel has or on the estimate for their value.
RIM, based in Waterloo, Ontario, attempted to block Ericsson AB’s $1.13 billion purchase last year of Nortel’s code- division multiple access, or CDMA, technology, on which most mobile phones in North America run, saying the deal would deprive Canada of vital technology.
‘National Treasure’
RIM co-Chief Executive Officer Mike Lazaridis said at the time that his company had bid on some of Nortel’s assets before the bankruptcy. He also called Nortel’s LTE technology a “national treasure.”
RIM advanced $1.63, or 2.8 percent, to $60.86 at 10:23 a.m. New York time in Nasdaq Stock Market trading.
Many of the innovations RIM is working on to improve the way information is sent from a network to a device have derived from Nortel research, according to Conley. RIM has about 1,300 patents approved by the patent office and they cite Nortel patents 101 times, Conley said. The majority of those Nortel patents are tied to LTE technology, he said.
“It would be a very efficient way for them to beef up their intellectual portfolio,” he said. Conley, who maintains a database that values patent portfolios, said he has no affiliations or business ties to Nortel or RIM.
Ericsson, based in Stockholm, would be interested in pursuing more Nortel patents, Mark Henderson, head of the company’s Canadian unit, said last August. Patricia Maclean, a company spokeswoman in Canada, said Ericsson had nothing to add.
Cisco Systems Inc., the world’s biggest maker of networking equipment, may also be interested in Nortel’s patents, according to Conley. The San Jose, California-based company has cited Nortel 3,200 times in its patent applications, Conley said, citing U.S. patent office data.
David McCulloch, a Cisco spokesman, declined to comment.
http://preview.bloomberg.com/news/2010-05-26/nortel-4-489-patent-national-treasure-may-draw-1-1-billion-to-pay-debts.html
Not Pretty - $0.05 drop in 1/100 of a second.
INTERDIGITAL INC - Nasdaq: IDCC
Time & Sales most recent next page
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Magilla, You've been among this Board's best resources for factual and honest posting for years.
What I'd like to know from the Monitors of this Bd is "Why" your posts have been deleted and by Who? I find it hard to believe that Jim or DRox are responsible.
The loss of your posting will be felt by me and this entire board.
I hope whatever explanation is provided will reassure you about your contributions and value.
magilla, It's nice to see you posting again. Keep it up.
Sprint Drops Plan for Google Phone (HTC featured)
By ROGER CHENG
Sprint Nextel Corp. confirmed that it was backing away from making Google Inc.'s Nexus One handset available on its network in another blow to the Internet giant's ambitions to sell its own smartphone.
It marks the second U.S. carrier to drop its commitment to sell the device.
WSJ Professional
* Smartphone Platforms Fight for Share
* Dow Jones News Service: Apple Gains Share
Last month, Verizon Wireless said it wouldn't make the Nexus One available on its network. T-Mobile USA is the only U.S. carrier to offer a wireless plan with the device; those who want the device to run on AT&T will have to pay the full $529 price tag.
Sprint's decision to move away from the Nexus One is another kick at Google's plan shake up the existing wireless phone model by selling phones and service plans directly through its website and circumvent the traditional wireless retailers. The strategy has met with mixed results, including poor handling of customer service and lackluster sales.
Sprint dropping the device was originally reported by website Gizmodo.com. Sprint and Verizon Wireless, which is jointly owned by Verizon Communications Inc. and Vodafone Group PLC, are both pointing to their own Android devices as superior alternatives. In Sprint's case, the company is pushing the upcoming Evo, which is the first U.S. device compatible with Sprint and Clearwire Corp.'s fourth-generation WiMax network.
"There's really no need for it," said Sprint spokeswoman Michelle Leff-Mermelstein referring to the Nexus One. She added that with HTC Crop.'s Hero, and Samsung Electronics Co. Ltd.'s Moment, there wasn't room for another Android device in the line up.
Verizon Wireless is pointing to the Nexus One's "cousin," the Incredible. All three devices were made by HTC Corp.
Verizon Wireless and Sprint likely didn't want another Android device taking away attention from the new devices. The Incredible and Evo are seen as the flagship devices for their respective carriers.
Despite the blow, the Android platform has quickly solidified its position in the growing smartphone market. The operating system overtook Apple Inc. and the iPhone as the No. 2 smartphone operating system, according to a report by NPD Group.
Write to Roger Cheng at roger.cheng@dowjones.com
Apple gains share in smart-phone market in first quarter
Growing presence of iPhone threatens rival devices; Nokia sues over iPad
By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) -- The growing power of Apple Inc. in the mobile-device market was underscored in two ways Friday: in a report from IDC showing the iPhone gaining market share, and in a fresh lawsuit from cell-phone giant Nokia Corp.
A study issued by research firm IDC showed Apple /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 235.86, -10.39, -4.22%) with a share of 16.1% of the global smart-phone market by the end of the first quarter. That's up from 10.9% for the same period last year, when the company had only half the share as its closest rival, Research In Motion Ltd.
Nokia Slaps Apple With iPad Suit
That gap is closing. IDC estimates that RIM /quotes/comstock/15*!rimm/quotes/nls/rimm (RIMM 64.92, -1.94, -2.90%) closed the period with 19.4% share -- down slightly from 20.9% last year.
Apple's iPhone competes with RIM's BlackBerry family of smart phones, as well as other devices from the likes of Motorola Inc. /quotes/comstock/13*!mot/quotes/nls/mot (MOT 6.60, -0.08, -1.20%) , Palm Inc. /quotes/comstock/15*!palm/quotes/nls/palm (PALM 5.70, -0.02, -0.35%) , HTC Corp. /quotes/comstock/11i!htcxf (HTCXF 16.80, +4.26, +24.22%) and Nokia /quotes/comstock/13*!nok/quotes/nls/nok (NOK 10.75, +0.09, +0.84%) .
Nokia is still the global leader in smart phones, with 39.3% market share, according to IDC. But that remains unchanged from the same period last year. The company doesn't rank in the top five smart-phone vendors in the key U.S. market.
RIM still enjoys a distinct advantage in the United States, where it has a 41.7% market share compared with Apple's 17.2%, according to IDC data.
Motorola has seen its fortunes improve in the marketplace. Globally, the company saw smart-phone shipments grow nearly 92% in the last year, to a market share of 4.2% compared with 3.4% last year, IDC said. The Schaumburg, Ill.-based company has launched a handful of devices using the Android mobile-operating system developed by Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 493.14, -5.53, -1.11%)
Overall, smart-phone shipments grew nearly 57% in the first quarter. The mobile-phone market -- which includes regular cell phones -- grew by nearly 22% in the same period.
Nokia steps up attack
Also on Friday, Nokia announced that it has sued Apple in a federal court in Wisconsin, alleging that the company's latest gadget infringes on its patents.
Apple launched the iPad touch-screen tablet last month. A WiFi-only version went on sale on April 3, and a version compatible with 3G wireless networks from AT&T Inc. /quotes/comstock/13*!t/quotes/nls/t (T 25.10, -0.04, -0.16%) launched later in the month.
Nokia claims the iPad 3G infringes on five of its patents. The Finnish company has filed a similar lawsuit over the iPhone, though the latter device also was included in Friday's action.
The patents in question "relate to technologies for enhanced speech and data transmission, using positioning data in applications and innovations in antenna configurations that improve performance and save space, allowing smaller and more compact devices," according to Nokia.
Apple sued Nokia in December, claiming infringement of its own patents. That suit came after Nokia filed its first complaint against Apple.
Dan Gallagher is MarketWatch's technology editor, based in San
Francisco.
http://www.marketwatch.com/story/apple-gains-share-in-smartphone-market-2010-05-07
DR - My headline! Put in, because that news was Hilited on the (Schwab) QCOM streamer. Believe it (along with Rambus) was included in my deleted post. Apologies if I inferred something that was inaccurate.