Source: Investment News Briefs Friday, July 10, 2009

This from Investment U:

As is usually the case, I’m sitting here writing from my comfortable home office in rural northeast Pennsylvania. I often marvel at the fact that even from my remote location, I’m able to do research and submit copy over a broadband connection.

Of course, 20 years ago we never would have thought of broadband penetration as a necessary component to our nation’s infrastructure. Back then most of us interacted with our televisions far more than with our computers.

Now, it’s hard for most of us to imagine life without a high-speed Internet connection, especially if you work from home as I do. For millions of Americans, broadband is the enabler for telecommuting, giving many more options when it comes to who to work for and where to work. Most homes are quiet environments with limited distractions, and generally result in higher productivity than their noisy company office counterparts.

It wasn’t too many years ago that I was saddled with dialup. Trying to be productive with a dialup connection is like trying to type with your nose. It can be done, but it takes a lot longer…

Broadband Penetration Across The United States

It is somewhat ironic that the most powerful nation in the world ranks twenty-fifth when it comes to broadband penetration. Indeed, only a little over 50% of American households have high-speed Internet connections. Compare that to South Korea, which has a broadband penetration of nearly 90%.

Before you fault the U.S. Congress, know that there are no less than three broadband expansion bills that were introduced in 2007. While there has been much debate (hot air) regarding a national broadband initiative, Congressional action hasn’t been forthcoming. What a surprise…

But if President-elect Obama has his way, every household could soon have the opportunity for a high-speed hookup. As he states on his website: “America should lead the world in broadband penetration and Internet access.” He thinks we should provide “true broadband to every community in America.”

If Congress and the new President are searching for a broadband penetration model to work from, they need look no further than one of America’s own states: Kentucky.

Broadband Penetrates Kentucky By 95%

Just a few years ago – 2004 to be exact – only 60% of Kentuckians had access to a broadband connection. Three years later 95% had access… an increase of 60%. But this didn’t just happen by accident.

“ConnectKentucky” is the bluegrass state’s arm of the larger, national, non-profit Connected Nation. Widely seen as the national model for digital inclusion, Connected Nation promotes higher broadband penetration and adoption.

Although it initially targeted four states – Kentucky, Ohio, Tennessee and West Virginia – the ultimate focus is all 50. Connected Nation’s research states that every 7% increase in broadband adoption could result in the following benefits:

• Job creation of around 2.4 million
• Annual health care cost savings of $692 million
• Annual fuel savings of $6.4 billion
• 3.2 billion fewer pounds of CO2 emissions per year
• 3.8 billion hours saved by accessing broadband from home
• $134 billion in direct economic impact

If Connected Nation’s numbers are anywhere close to those above, President-elect Obama might just be on to something. Of course, this gargantuan task translates into some real investment opportunities on this side of the fence.

7 Ways to Connect to Broadband Penetration Profits

One way to play the broadband penetration build-out is via specialty chipmakers that supply chips to the equipment companies. The following four companies all specialize in producing broadband chips:

• Broadcom (Nasdaq: BRCM)
• Conexant Systems (Nasdaq: CNXT)
• Texas Instruments (NYSE:TXN)
• Standard Microsystems (Nasdaq: SMSC)

Another way is via equipment makers like Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR). Cisco and Juniper’s equipment – at the heart of all broadband networks around the world – controls many different kinds of Internet traffic and directs it to its final destination.

A third way would be via Corning (NYSE: GLW), one of the world’s largest manufacturers of optical fiber, optical cables and other hardware and equipment components for the telecommunications industry.

It’s clear that President-elect Obama has many challenges facing him once he sets up shop. But you can bet that this Blackberry-toting, tech-savvy guy wants to be connected everywhere he goes. And so do we.

Source: Broadband Penetration: 7 Ways to Profit From Our Biggest Infrastructure Need

• Sales of existing homes rose in July, climbing 3.1% to a seasonally adjusted annual rate of 5 million units. Sales were expected to rise by only 1.6%, according to economists surveyed by Thomson/IFR, The Associated Press reported. Prices were down significantly from a year ago, as the median price for a home sold in July dropped to $212,000, down by 7.1% from 2007.

• U.S. investment bank Morgan Stanley (MS) said yesterday (Monday) its Saudi unit signed the kingdom’s first swap agreement, a vehicle that allows foreigners to buy into listed stocks through intermediaries, Reuters reported. “Interest from international investors … is very high, and we expect to see a lot more interest in these swap transactions from investors around the world,” Craig Niven, a managing director at Morgan Stanley, said in a statement.

• Former Treasury Secretary Robert Rubin yesterday (Monday) joined Citigroup Inc. (C) as the company’s “senior counselor.” Rubin will give up the chairmanship of the executive committee, which is being dissolved, but will remain on the board. Rubin served as an economic adviser to President Bill Clinton in 1993 and 1994 and was Treasury secretary from 1995 to 1999.

• Shares of Ford Motor Co. (F) touched their lowest price in more than 22 years yesterday (Monday). The company closed at $4.41 a share down six cents, or 1.34%, after earlier falling as low as $4.35 in afternoon trading.

• Crude for October delivery increased 52 cents to close at $115.11 a barrel on the New York Mercantile Exchange after a volatile day of trading, MarketWatch reported. The October oil futures contracts traded between $113.68 and $116.06 on concerns that a Caribbean storm could affect supplies. The National Hurricane Center said yesterday (Monday) that a tropical depression in the Caribbean has strengthened into Tropical Storm Gustav.

• Advanced Micro Devices Inc. (AMD) yesterday (Monday) announced it sold its digital-television chip business to Broadcom Corp. (BRCM) for $193 million. Broadcom hopes to return the loss-generating unit to profitability and expand its presence in the digital TV market, The Financial Times reported.

• A federal appeals court breathed new life into Star Scientific Inc.’s (STSI) patent lawsuit against R.J. Reynolds Tobacco Co., a unit of Reynolds American Inc. (RAI). The U.S. Court of Appeals for the Federal Circuit, based in Washington, D.C., ruled yesterday (Monday) that a federal trial judge in Maryland was wrong in deciding that Star Scientific’s patents were unenforceable, DowJones reported.

• Gold sank yesterday (Monday) in a quiet trading day as the dollar’s rise led to profit taking by investors. “I think gold is finding its base here. It’s mostly technical support holding prices above $820. Any dips below $820 are seen as a buying opportunity,” Carlos Sanchez, precious metals analyst at the CPM Group in New York, told Reuters.

Source: Global Investing Roundups Tuesday, August 26th, 2008