(mobile operators) vs 1.7 billion people (PC) - Squarespace

klapdorothypondMobile - Wireless

Nov 24, 2013 (4 years and 1 month ago)

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Smart
Phones are Eating
the World

Team
:
Investomics


Nima

Behkami
, PhD Deep
Agnani
, PhD Amjad Husain,
PhD

Bridge between: Wireless Networks
and Personal Computing

3.2 billion (mobile operators)
vs

1.7 billion
people (PC)

Growth opportunity


T
wo
-
thirds
of the mobile phone market has
yet to convert to smartphones.



Close
to a billion smartphones will be sold in
2013, while PC sales will gradually decline.



Existing Markets and Emerging Economies



Mobile Value Chain

Phone

Data
Plan

Content

Investomics

Focus


Mobile
phone handset
business


Wireless network operators


Mobile content providers

handset


Mobile
content

network

Communication Funds (US News)


General attributes of communication funds:


Concentrate on telecommunication and media
companies of various kinds


Combination of cable television, wireless
communication, communication equipment firms
and traditional phone companies


Some favor entertainment firms (broadcasters, film
studios, publishers, on
-
line service providers)

Top Two Communication Funds (US News)


T. Rowe Price Media And
Telecommunications Fund
(PRMTX)


Common stocks of media,
technology and
telecommunications


80% of net assets in companies
engaged in internet, publishing,
movies, cable/satellite, TV,
telephones, cellular services,
technology and equipment


Invest in companies in large
-
to
-
mid
-
capitalization range


Average risk (compared to
similar funds as per Morningstar)


Trailing returns:


Year to date: UP 11.9%


One Year: UP 17.8%


Expenses: 0.81%


Total Assets: $2.74B



ProFunds Telecommunications
UltraSector Fund (TCPIX)


Non
-
diversified


Seeks daily investment results,
before fess and expenses, that
correspond to 1.5X the daily
performance of the Dow Jones
U.S. TelecommunicationsSM
Index


Invest in securities and
derivatives that should have
similar daily characteristics as
1.5X the daily return index


Above Average risk (compared to
similar funds as per Morningstar)


Trailing returns:


Year to date: UP 24.7%


One Year: UP 40.6%


Expenses: 1.78%


Total Assets: $5.44M


T. Rowe Price Media and Telecommunications Fund

6 Month

1 year

5 year

Dow Jones

S&P 500

Nasdaq Composite

ProFunds

Telecommunications
UltraSector

Fund

6 Month

1 year

5 year

Dow Jones

S&P 500

Nasdaq Composite

Approach


Similar to T. Rowe Price but no movies (i.e. if
movies is the major asset / earner for the
company than may not invest in stock)


Major invest in companies in large
-
to
-
mid
-
capitalization range


Will invest in smaller companies if technology
/ service may be regarded as “break
-
through”




Research Methodology


Focus on growth stocks in telecom sector.


P/B
: <5;


EPS
growth past five years: Positive;


Net
profit margin: Positive;


Performance
(Rate of return): Quarter up; P/E: 5
-
25;


Sales
growth past five years: Positive;


Return
on equity: Positive (but cautiously: if company has large debt
then
should be raising funds by issuing stock rather than borrowing);


We
consider the probability that the two
-
thirds of the mobile phone
market has yet to convert to
smartphones. Developed and emerging
economies are going to do well in
the telecom sector in coming
decade
.


Holding period on our stock: 6 months to 2 years.


Selected stocks

Wireless Providers:


AT&T
Inc


Vonage Holdings
Inc

(VG)


Premier Global Services (PGI)


Globecomm

System
Inc

(GCOM)


Lumos

network Corp (LMOS)


Extreme Networks Ltd (EXTR)


NeuStar

Inc

(NSR)


Emerging Economies (India):


Bharti

Airtel

(BHARTIARTL)


Idea Cellular (IDEA)


Data Storage Companies:


Brocade communication systems
Inc

(BRCD)


Western Digital Corp (WDC)



Macro Indicators


GDP


Employment Numbers


Walmart

Sales


Manufacturers' new orders for non
-
defense

capital goods


Index of consumer expectations