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Hot Stocks: Up 100%, Apple’s Shares May Still Have Room to Run

Bob Blandeburgo — Mon, 31 Aug 2009 19:00:07 +0000

Shares of Apple Inc. (Nasdaq: AAPL) have gained 100% since the start of the year, and with the likely release of an innovative “tablet” computer and the pending debut of its wildly popular iPhone in China both in the offing, the company’s stock could still find some room to run.

Shares in the Cupertino, Calif.-based company are at their highest level since August 2008, thanks to a successive string of upbeat earnings reports, a near-$30 billion cash reserve and recession-defying sales of its products.

The iPhone alone sold 5.2 million units in the second quarter, compared to 717,000 the year before, and its Macintosh computers, which still have a miniscule share compared to Windows-based PCs, are gaining momentum.

Several market research firms, including Deutsche Bank AG (NYSE: DB) and Barclays PLC (NYSE ADR: BCS), now have price targets for Apple stock that exceed $200 a share.

Apple’s shares closed Friday at $170.05, up 60 cents, or 0.35%, each. An advance to $200 would represent a gain of about 18% from current levels.

Sales of Apple’s now-ubiquitous iPod have slowed, but Apple executives anticipated that would be the case, as sales of its music-playing iPhone and iPod Touch grow. Both of those devices have access to thousands of applications sold in the App Store.

A tablet computer from Apple, which has been a hot news topic in the tech world since last spring, moved closer to reality last week. The Wall Street Journal reported that since returning from leave to undergo aliver transplant, Apple Co-Founder and Chief Executive Officer Steve Jobs has devoted almost all of his time to this specific device.

Pundits have already dubbed the gadget the “MacBook Tablet” or “iTablet,” and executives believe it will have positive implications for media going forward.

“It’s a portable entertainment device,” one entertainment executive toldThe Financial Times. “It’s going to be fabulous for watching movies.”

Recording executives say Apple plans on using the large screen for interactive booklets and liner notes that typically accompany compact discs. And book publishers could view the tablet as an alternative to Amazon.com Inc.’s (NASDAQ: AMZN) popular Kindle or Sony Corp.’s (NYSE ADR: SNE) Reader in the growing e-book market.

“It would be a color, flat-panel TV to the old-fashioned, black-and-white TV of the Kindle,” one book executive told the FT.

Hollywood and video game executives haven’t been briefed on the tablet, but both have shown optimism for it. A large selection of movies and games are already available for the iPod, iPod Touch and iPhone.

Apple is one of the most secretive companies in Silicon Valley. Its iPhone 3G S, which sold 1 million units in its first weekend, wasn’t announced until a few days before its release. By contrast, one of its primary competitors Palm Inc.’s (NASDAQ: PALM) Pre smartphone, released a few weeks before the 3G S in June, was first announced in January at the Consumer Electronics Show. Apple is aiming for a September or October launch of the tablet, The FT said.

While tablet computers are nothing new – they first debuted in the early part of this decade – they only comprise 1.4% of the global portable market, The Journal said. Toshiba Corp., Hewlett-Packard Co. (NYSE:HPQ) and Fujitsu Ltd. (OTC ADR: FJTSY) all attempted to sell tablets, but ultimately the devices proved to be too cost-prohibitive for consumers.

Despite the worst economic downturn since World War II, Apple is having no trouble convincing consumers to buy iPhones with pricey plans and more expensive Macs. Oppenheimer & Co. analyst Yair Reiner told the FT he expects Apple’s tablet to cost between $600 and $1,000, the range for many Windows-based laptops today.

The tablet is considered by analysts to be Apple’s answer to popularnetbooks, which are smaller laptop PCs designed for navigating the Internet. They usually cost between $200 and $400. CEO Jobs and others in the Apple brass ruled out developing a netbook in a conference call last fall.

“We don’t know how to make a $500 computer that’s not a piece of junk,” Jobs said at the time.

The iPhone Meets the Red Dragon

Apple, whose Mac computers have played second fiddle to personal computers since 1984, found mainstream success in the gadget realm starting in 2002 when it debuted the iPod. To date, roughly 300 million iPods have been sold since 2002. In 2007, Apple debuted the iPhone, which has sold more than 26 million units.

The iPhone will make its debut in mainland China in the fourth quarter with state-owned China Unicom Ltd. (NYSE ADR: CHU) having cut a deal to act as the exclusive carrier for three years. Like AT&T Inc. (NYSE: T) in the United States, Unicom will not share revenue with Apple. Instead, it will offer a subsidy to consumers to lower the price, which is expected have a similar $99 to $299 range with two-year service contracts.

Unicom, which is rolling out its third-generation network (3G), enabling wireless video and high-speed Internet navigation, has 141 million wireless users. Unicom will be competing with an estimated 1.5 million gray market iPhones, The Journal reports, citing research firm BDA China Ltd. Unicom, which just reported a 45% drop in profit, is counting on Apple’s iPhone to gain share over market leader China Mobile Ltd. (NYSE: CHL), which has over three times Unicom’s subscribers.

The overall Chinese mobile market, which has 687 million subscribers – more than twice the population of the United States – is highly competitive. Several phones running Google Inc.’s (Nasdaq: GOOG) Android operating system are due by year’s end, and China Telecom Ltd. (NYSE ADR: CHA) is in talks with BlackBerry maker Research in Motion Ltd. (Nasdaq: RIMM) and Palm to bring those phones to the world’s fastest-growing major market.

“It’s essential for Apple to be in China; it’s a huge market,” CIMB Securities Ltd. Deputy Head of Research Bertram Lai told Bloomberg News. The iPhone “is not just the premium product, it’s an aspirational product,” he said.

Source: Hot Stocks: Up 100%, Apple’s Shares May Still Have Room to Run

Rebounding Tech Sector Stars Could Play Key Role in U.S. Economy’s Second-Half Rebound

Bob Blandeburgo — Wed, 01 Jul 2009 16:49:24 +0000

If the last three months are any indication, the U.S. tech sector has shaken off its recession-heightened late-winter doldrums, and could see its fortunes soar in the year’s second half as businesses and consumers open their wallets and the broader economy picks up speed.

The technology-laden Nasdaq Composite Index was at the forefront of the most-recent market rally, having soared more than 45% since hitting its 52-week low on March 10. That outpaced both the Dow Jones Industrial Average – up 30% in that time – and the Standard & Poor’s 500 Index – up about 37%.

According to industry analysts, the technology sector – because it is heavily reliant on borrowing, as well as consumer demand – can serve as a harbinger of economic recovery.

“Technology tends to be a leader in the early stages of an economic turn. That’s what we took for as confirmation of a sustainable rally-money rotating into a sector that historically is seen as consumer- and business-sensitive, and requiring more leverage in terms of borrowed money, because it is more sensitive to the economy,” Marc Pado, U.S. market strategist at Cantor Fitzgerald told MarketWatch.com. “I expect technology to continue to lead well through this year and into February of next year.”

Spearheading the Nasdaq’s charge has been Redmond, Wash. software giant Microsoft Corp. (Nasdaq: MSFT). While its fiscal third-quarter profit fell 11% from a year earlier, Microsoft beat analysts’ expectations, helping the company’s stock to surge more than 50% from its mid-March low. Microsoft is up about 16% in the past month.

Semiconductor manufacturer Texas Instruments Inc. (NYSE: TXN) could trade in the is up more than 45% in the past six months to its current level of about $21 per share. The company could trade up into mid-$30s within 12 months, according to Paul J. Nolte, director of investments atHinsdale Associates Inc., an Illinois money management firm.

Earlier this month, in fact, Texas Instruments sharply raised its second-quarter financial guidance. The reason: Customers had slowed the rate at which they were reducing chip inventories – a signal that the market for semiconductors may be stabilizing.

The company now expects to report earnings per share (EPS) of 14 cents to 22 cents, up from the previous forecast of 1 cent to 15 cents per share.

Opening New Windows

The long-suffering PC market may get a shot in the arm this fall with the Oct. 22 release of Microsoft’s Windows 7, which is all but guaranteed to generate better reviews than its predecessor, Windows Vista. Pre-release versions being publicly tested are already being called better than Vista, which was dogged by geeks and general end-users alike for its slow performance and questionable compatibility with legacy software and hardware.

Stopping short of admitting the goof and giving away Windows 7 to existing Vista users, Microsoft is offering cheaper upgrades to those who pre-order Windows 7 between June 26 and July 11. The company will offer free Windows 7 upgrades to anyone who purchases a PC pre-installed with Vista after June 26.

Windows 7 is expected to be the operating system of choice for information technology (IT) managers who make purchasing decisions for corporate users.

“The upcoming introduction of Windows 7 could spur a rapid corporate PC upgrade cycle starting in late 2010/early 2011, catalyzed by the end of support for Windows XP and a recovery-based increase in IT spending,” said Jeffries & Co. Inc. analyst Katherine Egbert wrote in a recent research report.

But history shows that a release of a new operating system – no matter how positive the buzz – will translate into only a slight increase in PC sales, Microsoft Senior Vice President Bill Veghte said in a webcastearlier this month. On the business side, enthusiasm is high for Windows 7, but corporations will not rush to upgrade when it is released. The release “will get drowned by the macroeconomic environment,” Veghte said. “As the macro environment comes back, people will have to buy new PCs. People aren’t using PCs any less.”

Game On

Looking ahead, the tech sector is anticipating a slew of product releases in the year’s second half – many of them in the $22 billion video-game sector, which lives and dies on new releases.

Activision Blizzard Inc. (Nasdaq: ATVI), the largest third-party game publisher in the world, will lead the way with the latest in its rock music game series with the September release of “Guitar Hero 5″ on four platforms: Sony Corp.’s (NYSE ADR: SNE) PlayStation 2 and 3, Microsoft’s Xbox 360 and Nintendo Co. Ltd.’s (OTC ADR: NTDOY) Wii. The third iteration of “Guitar Hero” became the first video game ever to achieve $1 billion in sales.

But the music from Activision won’t stop with the last strum of a toy guitar: The company will debut “DJ Hero” in October for the same four platforms. “DJ Hero” will ship with a mock turntable and should appeal to fans that don’t turn to rock for their music fix.

Activision will release new titles for proven franchises such as “Modern Warfare” and “Tony Hawk.” The first “Modern Warfare” title, released in 2007, has sold 13 million copies worldwide and is one of the best-selling games on Xbox 360. The new “Tony Hawk” game represents the 12th installment in the series since it was started 10 years ago.

While sales of console games typically garner most of the attention, it is Activision’s “World of Warcraft” (WoW) playing the role of its single largest sales generator. In 2008, WoW accounted for $1.1 billion in revenue, or 38% of Activision’s total revenue. Sales from all of Activision’s console titles were $1.2 billion. WoW has more than 11.5 million subscribers, Activision said.

Since its dropping down to its 52-week low of $8.14 in January, Activision shares have risen steadily, and are now trading in the $12 range. With a war chest stuffed with nearly $3 billion in cash and ratingsof mostly “Buy” or “Strong Buy” from analysts, Activision may warrant closer study by individual investors, too.

Activision’s rival, Electronic Arts Inc. (Nasdaq: ERTS) also has some potential-big-hit titles coming in the year’s second half, but saw its losses more than double to $1 billion for the fiscal year that ended March 31. Like most game publishers looking to cash in on the holiday shopping season – primetime for consumer spending – EA is saving its best for the second half of 2009.

Titles such as “Madden NFL 10,” “The Beatles Rock Band” and “Left 4 Dead 2″ will sell well, but the outlook for EA on Wall Street is mixed, with the majority of analysts rating the company as a “Hold.”

Some analysts say that EA can weather the current downturn in consumer spending, as it sits on more than $1.6 billion in cash, according to its annual regulatory filing with the Securities Exchange Commission (SEC), but the outlook for the 2009 Christmas shopping season remains uncertain.

Will iSpend?

Following a sharp drop in its stock after the revelation that its chief executive officer’s health may be worse than previously thought, shares of Apple Inc. (Nasdaq: AAPL) have slowly been climbing back toward its 52-week high of $180.91. The shares are currently trading at about 21% below that peak.

The Cupertino, Calif.-based company on June 8 removed a barrier that had stopped many consumers from purchasing its popular iPhone when it lowered the price of its 8-gigabyte 3G model to $99. With wireless plans starting at around $70 per month, Apple’s phone – and perhaps more importantly, its app store – will find its way into the hands of many more consumers in the second half of 2009.

Couple the 8GB iPhone 3G with the newly released, feature-rich 3GS model – and then stir in a barrage of television commercials – and the result should be a marked improvement in revenue.

It is unlikely that Palm Inc.’s (Nasdaq: PALM) Pre will put a dent in iPhone sales, partly because of sustained shortages as Apple floods the market with its phone. However, Sprint Nextel Corp. (NYSE: S) customers locked in their contracts looking to upgrade to a phone with a growing app catalog will see the Pre’s similarities with the iPhone.

Sprint Chief Financial Officer Bob Brust told investors via a webcast at Wachovia Corp.’s Annual Mid-Year Equity Conference that Pre shortages still exist weeks after its launch.

“We still have a backlog of subscribers but it’s not unmanageable and we get shipments every week,” Brust said. Sprint is the exclusive carrier of the Pre.

Analysts estimate that 50,000 to 100,000 Pres were sold in its debut weekend earlier this month, while Apple said the new iPhone sold 1 million units in its opening weekend.

Source: Rebounding Tech Sector Stars Could Play Key Role in U.S. Economy’s Second-Half Rebound

[Editor's Note: This tech-sector preview is the opening installment of a new Money Morning series that will make economic projections for key U.S. sectors for the last half of 2009. As part of that series, look for forecasts for housing, energy, U.S. stocks and the emerging markets.]

Investment News Briefs Friday June 26,2009

Money Morning Staff — Fri, 26 Jun 2009 16:30:53 +0000

Jobless Claims Surprise; GDP Revised Up; AIG Makes Plans to Pay Back Feds; Palm Losses Mount, But Revenue Beats Street; Micron Loss Not As Much As Expected; Senator: Health Care Bill Could Cost $1 Trillion; GM Keeps 1,200 Jobs in Michigan

Unemployment claims unexpectedly rose yesterday (Thursday), asthe number of U.S. workers filing new claims jumped by 15,000 in the week ended June 20 to a seasonally adjusted 627,000, the Labor Department reported. The four-week moving average of initial claims, a less volatile measure, rose to 617,250 from 616,750, signaling the U.S. job market is stagnant.

U.S. gross domestic product (GDP) contracted at a 5.5% annual rate in the first quarter after plunging at a 6.3% pace in the fourth quarter of 2008, the Commerce Department said yesterday (Thursday). That means the U.S. economy just went through itsworst eight-month period in more than 60 years, according toMarketWatch. The government last month estimated GDP fell at a 5.7% pace in the quarter ended March 31.

American International Group Inc. (NYSE: AIG) will repay part of its $40 billion debt to the U.S. government with $25 billion of preferred stock in two businesses Reuters reported. The two businesses – American International Assurance Co Ltd (AIA) and American Life Insurance Co (Alico) – will also be positioned for initial public offerings, should market conditions permit. AIG lost more than $99 billion in 2008 and U.S. taxpayers have committed up to about $180 billion to its rescue.

Palm Inc.’s (Nasdaq: PALM) losses grew but it beat Wall Street’s revenue estimates for its quarter ended May 31. The company reported a net loss of $91.5 million, or 78 cents per share on revenues of $86.7 million. That compares to a net loss of $41 million, or 40 cents per share on revenue of $296.1 million for the same quarter last year. Analysts were expecting a loss of 62 cents per share on revenues of $80.6 million.

Memory chipmaker Micron Technology (NYSE: MU) suffered a wider loss but beat analyst estimates for its quarter ended June 4. The company posted a net loss of $290 million, or 36 cents per share on revenues of $1.1 billion. That compares to a net loss of $236 million, or 30 cents per share on revenues of $1.4 billion in the same period the year before. Consensus estimates placed the loss at 43 cents per share on revenues of $1.1 billion.

A key senator said the health care proposal submitted to Congress by the Obama administration could cost as much as $1 trillion, but Republicans added there was no agreement on even the outlines of a bill, The Associated Press reported. “We have options that would enable us to write a $1 trillion bill, fully paid for,” Sen. Max Baucus, chairman of the Senate Finance Committee, told reporters. Baucus’ comments came one week after analysts estimated earlier proposals would cost $1.6 trillion over 10 years. While Baucus gave no details, others told The AP changes made in the proposal would lower the cost of government subsidies for those who cannot afford insurance, as well as scale back a planned 10-year series of rate increases for doctors serving Medicare patients. Almost 50 million Americans are without health coverage.

Michigan has won a competition with two other states to buildGeneral Motors Corp.’s (OTC: GMGMQ) next subcompact car, based on the Chevrolet Spark, The Associated Press reported. The win will save about 1,200 jobs at the factory in Orion Township, which was due to close this year. All 17 members of Michigan’s congressional delegation sent a letter to GM last week saying that the state’s economic woes — including an unemployment rate that hit 14.1% in May — made the project important for Michigan.

Source: Investment News Briefs Friday June 26,2009

Investment News Briefs Wednesday, June 24, 2009

Money Morning Staff — Wed, 24 Jun 2009 15:00:17 +0000

Existing Home Sales Rise, But Miss Estimates; Boeing Shares Plummet; Automakers Get $8 Billion for Fuel Efficiency; Sprint CFO Not Concerned About Pre Shortages; Kroger Beats the Street; MySpace Lays Off 300 More; Best Buy Testing Used Game Waters; Madoff’s Lawyer Pleads for Leniency

Existing home sales rose 2.4% to a seasonally adjusted rate of 4.7 million last month, the National Association of Realtors said yesterday. That compares to April’s rate of 4.6 million, but is still down from the same period last year, when it was 4.9 million. Economists surveyed by MarketWatch.com were expecting an increase to 4.8 million.

Shares of The Boeing Company (NYSE: BA) tumbled more than 6% yesterday (Tuesday) after the aircraft maker said it will miss its June 30 first-flight target for its new 787 Dreamliner and a new delivery timetable won’t be available for weeks. Already two years behind schedule, the plane’s monitors on the body above the wing showed stresses beyond what models predicted and there was little point flying in a reduced test pattern, Chief Executive Officer Scott Carson said in a conference call. “The delay will probably lead to at least several months of push-out on first delivery,” J.B. Groh, an analyst at DA Davidson & Co. told Bloomberg News in an interview. “The best-case scenario for first delivery may be mid-2010.” He has a “neutral” rating on the stock. The aircraft is Boeing’s fastest-selling model with 865 orders.

The Obama administration has awarded three automakers $8 billion in loans to develop more fuel-efficient cars, with Ford Motor Co.(NYSE: F) getting the lion’s share of the funds: $5.9 billion.Nissan North America Inc. and Tesla Motors each got $1.6 billion and $465 million, respectively. “We have a historic opportunity to help ensure that the next generation of fuel-efficient cars and trucks are made in America,” said President Obama in a statement. “These loans – and the additional support we will provide through the Section 136 program – will create good jobs and help the auto industry to meet and even exceed the tough fuel economy standards we’ve set, while helping us to regain our competitive edge in the world market.” The Department of Energy received more than 100 applications for fuel efficiency-related loans.

Shortages of Palm Inc.’s (Nasdaq: PALM) newly launched Pre will continue, but the smartphone has not felt any impact from last week’s launch of Apple Inc.’s (Nasdaq: AAPL) iPhone 3GS, Sprint Nextel Corp. (NYSE: S) Chief Financial Officer Bob Brust told investors at Wachovia Corp.’s Annual Mid-Year Equity Conference during a webcast. “We still have a backlog of subscribers but it’s not unmanageable and we get shipments every week,” Brust said. Analysts estimate between 50,000 and 100,000 Pres were sold in its opening weekend earlier this month, while Apple said Monday the new iPhone sold 1 million units in its opening weekend.

Kroger Co. (NYSE: KR) beat analyst estimates for its first quarter, thanks to a higher-than-expected profit. For the quarter ended May 23, the largest U.S. supermarket chain posted a net income of $435.1 million, or 66 cents per share on revenue of $22.8 billion. That compares to a net income of $386 million, or 58 cents per share on revenues of $23.1 billion in the same period last year.The average analyst estimate for Kroger was 61 cents per share, according to Reuters estimates. The company’s full-year earnings forecast was unchanged from an estimated $2.00 to $2.05 per share.

News Corp.’s (Nasdaq: NWS) social networking websiteMySpace.com will cut an additional 300 jobs outside the United States, The New York Times reported. The number represents two-thirds of its international staff of 450. The news comes less than a week after MySpace said it would cut 1,000 jobs due to sagging ad sales and lost share to rival Facebook Inc. “Facebook seems to have been better at opening up its appeal to more age groups, in more markets,” said Karin Von Abrams, an analyst at research firm eMarketer told The Times. “Once the momentum begins to build for one site, there’s a kind of self-fulfilling prophecy to it.”

Best Buy Co. (NYSE: BBY) will begin testing kiosk-based used video game sales in the Dallas and Austin, Tex. markets starting this week, The Wall Street Journal reported, citing a blog postingby Chief Marketing Officer Barry Judge. The kiosks will scan the games to ensure functionality, and then dispenses a voucher for a Best Buy gift card based on the value of games traded in. The used video game market has proven to be lucrative for the world’s largest game retailer, GameStop Corp. (NYSE: GME). GameStop generated $165.5 million in profits from the sale of used games alone in its last quarter ended May 2, compared to $156.6 in the same quarter the previous year. Taking into account all of the used products it sells including consoles and accessories, GameStop turned a profit of $542.1 million in its last quarter, versus $473.4 million in the same quarter last year. Wedbush Morgan analyst Edward Woo told The Journal that GameStop owns about 90% of the used game market.

Bernie Madoff’s lawyer has asked a federal judge for leniency in his sentencing, requesting that he serve as few as 12 and no more than 20 years in prison after he was convicted of orchestrating a massive Ponzi scheme, Bloomberg News reported. “We seek neither mercy nor sympathy. Respectfully, we seek the justice and objectivity that have been — and we hope always will be — the bedrock of our criminal justice system,” defense lawyer Ira Sorkin said in a letter filed in Manhattan federal court yesterday (Tuesday). The 71-year-old Madoff is facing a maximum 150 years in prison when he is sentenced on Monday.

Source: Investment News Briefs Wednesday, June 24, 2009

Will Housing Continue Its Uptick? GDP Could Scare The Market on Thursday

Christian Hill — Mon, 22 Jun 2009 17:30:51 +0000

No real surprise here, Existing Homes Sales are expected to increase. It should be a combination of two factors, too-good-to-pass-up deals on foreclosed homes, and families moving to new school districts over the summer to avoid switching schools mid-year.

Monday
Earnings Announcements: Walgreens (WAG)

Tuesday
Economic Reports: Existing Home Sales

Earnings Announcements: Oracle (ORCL)

Wednesday
Economic Reports: Durable Orders, New Home Sales, FOMC Rate Decision

Durable Orders are expected to fall dramatically since last month. I am not sure if this is due to no more income tax refund checks to spend on big ticket items or not, but with Personal Spending for May expected to increase, a drop in Durable Orders is surprising.

New Home Sales are expected to climb this month, and after last weeks surprise in Building Permits and Housing Starts, I have a hard time trying to figure out the New Home Sales report. If I had to pick, I would expect the report to meet or beat expectations. Just a gut feeling.

The FOMC Rate Decision is announced at 2:15, and I don’t expect a change to be made to the current 0.0-0.25 percent rate

Earnings Announcements: Monsanto (MON), Rite-Aid (RAD),

Thursday
Economic Calendar: Q1 GDP Final

Expectations are for no revision to the first quarter GDP figure. At this point, I doubt there would be a surprise showing improvement. If anything, the report may show a tenth of a point or so larger contraction for the first quarter GDP.

Earnings Announcements: Con-Agra (CAG), Palm (PALM)

Friday
Economic Reports: Personal Income and Spending, Michigan Sentiment

As mentioned earlier, Personal Income and Personal Spending for May are both expected to show an increase. I guess the surprise is that the expected increase in spending is larger than the expected increase in income. With money tight for everyone, an increase in spending is quite surprising.

The Michigan Sentiment reading is expected to show no change since the last report, which is about what I expected. With rising gas prices, uncertainty about the economy and slowing job losses, the consumer has many offsetting considerations.

Source: Will Housing Continue Its Uptick? GDP Could Scare The Market on Thursday

Research in Motion Still Leading the Smartphone Pack

Bob Blandeburgo — Mon, 22 Jun 2009 17:24:46 +0000

There’s a lot of figures in the news being tossed around about the smartphone market, and while it may be difficult to make sense of it all, one thing is clear: The market is growing at a rapid pace, and will soon take over conventional mobile phones as the device of choice among consumers and corporate users alike.

In spite of tough economic times, smartphone sales represented 23% of all mobile phone sales in the fourth quarter of 2008, up from just 12% a year earlier, according to market research firm The NPD Group Inc. Another firm, Gartner Inc. (NYSE: IT), says smartphone sales will increase 25% even as the overall mobile phone sector contracts.

Some of the millions of jobless Americans are turning to smartphones as a tool in their job searches, as a means to enhance communication with potential employers.

“I don’t know if it’s really an expectation, but if another job candidate returns an e-mail message eight hours later, and you get back immediately with a message that says ‘Sent from my iPhone,’ I think it has to be a check box in your favor,” jobseeker Helene Rude told The New York Times.

While Apple Inc.’s (Nasdaq: AAPL) iPhone typically gets all the headlines, it is Research in Motion Ltd.’s (Nasdaq: RIMM) line of BlackBerry phones that commands 55% of the market share versus Apple’s 20%, according to market research firm International Data Corp.

The key factors in RIM’s success are market penetration, choice of models, price and, most recently, enticing promotions such as buy one, get one free. BlackBerry phones are on all U.S. carriers, and range in price from $30 to $250. Apple’s two iPhone models, the 3G and 3G S, will cost any user who signs a new contract $99 and $199, respectively.

Smartphones are proving to be profitable, as well. Canada-based RIM last week announced a net income of $643 million, or $1.12 per share diluted on revenues of $3.4 billion. That compares to a net income of $482.5 million, or 84 cents per share diluted on revenue of $2.2 billion in the same period a year ago. Approximately 81% of RIM’s revenue came from sales of BlackBerry devices.

Few smartphones are limited to one carrier. Among them are the iPhone, which can be used only on AT&T Mobility LLC’s network, and Palm Inc.’s (Nasdaq: PALM) newly launched Pre, available only through Sprint Nextel Corp. (NYSE: S).

Apple’s recent price drop on its 8 gigabyte iPhone 3G model to $99 will be interesting to watch, as it will put the company’s wildly popular App Store in the hands of more consumers, who are being bombarded by a series of “there’s an app for that” TV commercials.

Other smartphone makers are playing catch-up in the app department, which will not only be an important factor in consumers’ purchase decisions, but another revenue stream for smartphone makers and their wireless carrier partners.

Apple Chief Executive Officer Steve Jobs told The Wall Street Journalthat his company’s App Store generated $1 million a day in its first month.

Apple’s App Store launched in July last year, followed by Google Inc.’s (Nasdaq: GOOG) Android Market (for HTC Corp.’s G1 phone) in October, BlackBerry App World in April and finally, Palm App Catalog, still in its infancy after its debut with the June 6 launch of the Pre.

Source: Research in Motion Still Leading the Smartphone Pack

Hot Stocks: Palm Pre Is No ‘iPhone Killer’

Money Morning Staff — Thu, 11 Jun 2009 14:03:32 +0000

Palm Inc. (Nasdaq: PALM) can’t seem to catch a break. Just days after its stock hit a 52-week high and its new Pre smartphone sold out in its Saturday debut, Apple Inc. (Nasdaq: AAPL) stole Palm’s thunder by announcing a new iPhone, the iPhone 3G S, and more importantly, cut the price on its existing 8 gigabyte model to $99-half the price of the Pre.

The move was a very shrewd one that will allow Apple and its iPhone to stay ahead of the pack in the smartphone industry. But Palm’s attempt to win a share of the market by releasing a smartphone that is compatible with Apple’s iTunes computer software shows that it is determined to give Apple a run for its money.

Pre had an impressive launch, but gauging just how impressive will be difficult until Palm actually reveals the numbers. Analysts’ estimatesrange between 50,000 and 200,000 Pres sold this past weekend. Apple’s first-generation iPhone sold 146,000 units on its launch day alone back in 2007.

Shortages of Pre may be to blame for a cooling of investor interest Palm reached its 52-week high of $14.14 on Friday: The shares had fallen 10% by Tuesday’s close and were down another 5.5% in mid-afternoon trading yesterday (Wednesday). And it isn’t likely that a Pre shortage-artificial or not-would produce the feverish demand that’s sometimes seen with electronic products … demand that can send the product-maker’s stock into a stratospheric climb.

Palm’s Pre is billed as an “iPhone killer” by some, but it really isn’t and probably never will be unless it can rival Apple’s impressive arsenal of iPhone software applications – known as “apps” in the technology lexicon.

Apple’s “App Store” – an online store that sells added features for the iPhone like access to Google Earth, the Weather Channel, and social-networking site Facebook – is a big reason for the iPhone’s popularity.More than 1 billion apps were downloaded to iPhones since the App Store’s launch last July.

To date, there are 50,000 applications available for iPhone. The closest competitor, Google Inc.’s (Nasdaq: GOOG) Android cell phone operating system, has only 5,000 apps available for HTC Corp.’s G1. Pre had only18 apps at launch.

Apple takes 30% of the revenue generated by the App Store. Apple Chief Executive Officer Steve Jobs says the App Store generates $1 million in revenue daily, which would mean his company makes about $300,000 from the App Store daily.

Lightspeed Venture Partners‘ Managing Director Jeremy Liew said Applemade $45 million from the App Store in its first nine months.

Apple’s exclusivity with AT&T Inc. (NYSE: T) is due to end next year, and iPhones may become an option on the largest U.S. wireless carrier – Verizon Communications Inc.’s (NYSE: VZ) Verizon Wireless unit – as soon as next year, according to a USA Today report. That would expose a whole new customer base to the iPhone and its popular applications. Sources told The Wall Street JournalPre is set to debut with Verizon in January.

While it remains to be seen if iPhone can be toppled, the one safe bet is that the smartphone market will get more crowded. In addition to Apple’s iPhone and Palm’s Pre, Research in Motion (Nasdaq: RIMM), which makes the Blackberry, are all jockeying for market share.

Blackberry’s biggest advantage over the iPhone and the Pre is that it isn’t subject to limiting exclusivity agreements: The Blackberry is available to customers of all major U.S. wireless carriers. Currently, anyone who wants an iPhone has to be a part of – or switch to – AT&T’s network, and anyone who wants a Pre must be a to be a Sprint Nextel Corp. (NYSE: S) customer.

Analysts are mixed on RIMM’s outlook, but the consensus estimate among analysts is that the Waterloo, Ontario (Canada)-based company will earn $3.96 per share for the current fiscal year, and will see its profits advance to $4.70 per share in 2010. That would push the Price/Earnings (P/E) ratio – currently 25 – down to 17.5 on a company whose earnings are projected to grow at an average annual rate of 20% for the next several years.

Source: Hot Stocks: Palm Pre Is No ‘iPhone Killer’

Smart Phones, Smart Investments?

Andrew Snyder — Mon, 08 Jun 2009 23:07:22 +0000

The cell phone industry is making big moves today. Palm’s (NASDAQ:PPL) new phone release is taking its share price down. While speculation over Steve Jobs and the iPhone is creating its own problems for Apple (NASDAQ:AAPL).

It is a pretty dismal day on Wall Street. With thoughts of surging interest rates, an unstoppable rise in unemployment levels and bank fears remaining high, plenty of investors are taking their recent gains and heading back to the sidelines.

With the S&P plunging below the 930 level today and volatility on the rise, it is not a day to put a news release on the Street, especially if it contains less-than-stellar news.

Palm (NASDAQ:PALM) is learning the lesson the hard way today. After releasing its highly anticipated Pre over the weekend and promptly selling out of just about every phone it had available (about 50,000 units), its shares are down by close to 10%.

The hot-selling left 15,000 Pre buyers on a waiting list, but it is opening Palm to increased pessimism. Investors are worried the company will not be able to deliver phones to the market fast enough to fight off fierce competition from rivals, especially strong market leaders like Apple (NASDAQ:AAPL).

There is likely nobody sweating Palm’s productions problems more than Sprint (NYSE:S). The company has just six months to be the exclusive seller of the Pre phone. After that, Verizon (NYSE:VZ) and its army of wireless customers will have access to the product.

Customers that do not get locked into Sprint’s network between now and then will have ample opportunities to check out Verizon’s offering. Sprint needs Palm to deliver every phone it can.

Is the Apple ripe?

Then, of course, there is the 800-pound gorilla, Apple’s iPhone. The phone with a seemingly unlimited amount of downloadable applications has taken the market by storm, making Apple a dominant player in the cell-phone market, a notion that was unthinkable just a few years ago.

But it proves one heck of a good point.

The cell-phone industry is product driven. Produce a high-demand product and a company can be catapulted to the top of a fickle industry. Just because Apple is in charge now, does not mean it will stay that way.

It will be interesting to see what the next generation of the iPhone will bring. Fortunately, we will find out soon enough. Apple and its conference are generating plenty of headlines this week.

As investors, there are multiple ways to play the situation. With volatility on the rise, well-played options contracts will certainly lead to strong profits. But even without the leverage of derivatives, investors can expect to have multiple double-digit profit opportunities.

Palm may be down by 9% today, but the move is certainly not finished. One hint of positive news could reverse the action. Or a single press release can turn it into a long-term trend.

Apple is teetering as well. The iPhone has created a lot of buzz. It will be hard for the company to live up to current standards if the economy does not make the fast rebound that was priced into the markets over the last few weeks.

And then, of course, there is always the risk associated with Steve Jobs’ health. Talk about a wild card.

The point is today’s action has created multiple trading opportunities. Take advantage of big, psychological market swings. In the long run, the market is rational and will work itself out. But all too often (like today), emotions make for wicked short-term mistakes.

Take advantage of them.

Source: Smart Phones, Smart Investments?

Global Investing Roundups Tuesday, December 23rd, 2008

William Patalon III — Tue, 23 Dec 2008 13:09:55 +0000

Kenya Growth Stalls Quickly; Caterpillar Cuts Pay and Jobs; Wal-Mart Offers $2.66 Billion for Chile’s Biggest Grocer; Walgreen Falls Short, Cuts Opening Plans; Palm Gets $100 Million Injection; JPMorgan Buys UBS Assets; Oil Falls 6%

Kenya’s economy grew 2.1% in the third quarter, down significantly from the 6.3% gross domestic product growth it posted a year earlier. On top of the global financial crisis, Kenya suffered from post-election violence and a severe drought, Bloomberg reported.

Caterpillar Inc. (CAT) said it will offer buyouts to some employees and cut white-collar pay by up to 50%. Last week, the heavy equipment maker announced plans to lay off 814 works at its engine assembly plant, Reuters reported.

Wal-Mart Stores Inc. (WMT) has made a $2.66 billion offer for Chile’s biggest grocery chain, Distribucion y Servicio D&S SA (ADR:DYS). Wal-Mart’s outgoing international chief and soon-to-be CEO Mike Duke said in October that Chile’s economy is strong and growing, Bloomberg reported.

As its quarterly profits missed estimates, drugstore operator Walgreen Co. (WAG) said it is cutting back on plans to open more stores. Profit fell to $408 million, or 41 cents a share, in its fiscal first quarter ended Nov. 30, Reuters reported.

Palm, Inc. (PALM) yesterday (Monday) secured a much needed $100 million equity investment from Elevation Partners, a venture capital firm that includes Bono, lead singer for the rock band U2, BetaNews reported. Palm a maker of mobile electronic devices, will use the money to help launch a smartphone that will be compete with Apple’s 3G iPhone.

UBS AG (UBS) will sell its Canadian energy operations and global agriculture business to JPMorgan Chase & Co. (JPM), Reuters reported. JPMorgan is buying Canadian Energy, UBS’ Canadian-based commodities energy business, as well as UBS’ London-based Global Agricultural Commodities business.

Light, sweet crude for February delivery fell $2.45, nearly 6%, on the New York Mercantile Exchange yesterday (Monday) to settle at $39.91 a barrel. Crude prices have now fallen 70% from their July peak of $147.47 a barrel.

Source: Global Investing Roundups Tuesday, December 23rd, 2008

Global Investing Roundups Friday, September 19th, 2008

William Patalon III — Fri, 19 Sep 2008 13:24:37 +0000

Palm Can’t Compete; Oracle Reports Profit Jump; Gustav Drives Unemployment; AIG Taps Edward Liddy; McCain Wants SEC Chief Canned; FedEx Felled by Fuel Costs

Palm Inc. (PALM) yesterday (Thursday) reported its fifth consecutive quarterly loss, as that maker of the Treo smartphone continued to lose ground to the more popular Blackberry models from rival Research in Motion Ltd. (RIMM). “Revenues will still be under pressure and profits elusive” over the next few quarters, Chief Executive Officer Ed Colligan, said on a conference call with analysts, Bloomberg News reported.

Oracle Corp. (ORCL) said yesterday (Thursday) that its fiscal first-quarter profit jumped 28% to $1.08 billion, 21 cents per share, from $840 million, 16 cents per share, a year ago. Revenue increased 18% to $5.33 billion.

New applications for unemployment benefits rose unexpectedly last week, largely due to Hurricane Gustav, the Labor Department said yesterday (Thursday). Initial jobless claims rose to a seasonally adjusted 455,000, up 10,000 from the prior week, adding more strain to a U.S. economy that is already clinging to the ropes.

American International Group Inc. (AIG) yesterday (Thursday) named Edward Liddy as its chairman and chief executive. Liddy succeeds Robert Willumstad, who is leaving after just three months on the job.

Republican presidential candidate Sen. John McCain yesterday (Thursday) called for the firing of U.S. Securities and Exchange Commission Chairman Christopher Cox, Reuters reported. “The chairman of the SEC serves at the appointment of the president and in my view has betrayed the public’s trust,” McCain said. “If I were president today, I would fire him.”

FedEx Corp. (FDX) yesterday (Thursday) announced a 22% drop in fiscal first quarter profits on the high cost of fuel, MarketWatch reported. Net income for the overnight delivery carrier fell to $384 million, or $1.23 per share, from $494 million, or $1.58 per share, for the same period the year prior.

Source: Global Investing Roundups Friday, September 19th, 2008