Anyone interested in smartphones or electronics has most likely seen or heard about Apple's (NASDAQ: AAPL) new iPhone -- a revolutionary smartphone with a long list of features. Just yesterday, Research in Motion (NASDAQ: RIMM) announced its newest phone, the Blackberry 8820.
Apple's iPhone houses everything from a basic phone to a fully-functional iPod with pretty much everything in between. The phone uses a revolutionary touch screen for navigation and typing, voicemails are immediately saved to the phone as sound files (no more calling into your voicemail!), and it can even connect to Wi-Fi networks. But it does have one main negative: the fact that it's a "pull" email reader, meaning it has to pull emails from your email inbox on some predetermined basis. While this doesn't matter for most people, those who need constant, up-to-the-minute email feeding are inhibited.
Research in Motion's new phone is very comparable and a great advancement from the previous Blackberry. This phone is considered to be "dual mode," meaning it can operate on either a cellular network or WiFi network. The 8820 has the traditional Blackberry email system, which means emails are immediately received and sent assuming service is available in the area. And to top it all off, the phone has a full GPS system complete with mapping -- excess? I think so, but fun to mention nonetheless.
I consider the smart bet in the smart phone revolution to be AT&T (NYSE: T) - the exclusive service provider for both of these phones, at least for the time being. As you can see from the chart, this stock is not being treated like has the only launching rights for these phones. The iPhone had a stellar launch and I don't see any reason that the Blackberry 8820 won't have the same, especially considering the loyal user-base of Blackberrys including everyone from civil servants to private equity fund managers.
So the primary catalyst for AT&T is going to be the tremendous positive headline flow which I expect to come out of continued iPhone popularity as well as 8820 success. But that's not all this stock has to offer -- the stock trades for less than 13x next year's expected earnings and offers operating margins superior to the industry average, despite the company's large size.
As an added bonus, investors have the potential to see shares advance due to the stock "catching up" to its primary index, the Dow Jones Industrial Average.
While I doubt AT&T will move as quickly or aggressively as Apple or Research in Motion, the stock is much less risky and offers investors the chance to bank on smart phone growth in the United States without paying 40-60x earnings.
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