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BusinessWeek: Be wary of stocks under $10

The weak market conditions have caused many stock prices to fall under $10. Not only smaller -- and perhaps lesser known -- stocks trade under $10 these days, but also some big and famous names such as Ford Motor Co. (NYSE: F), Motorola Inc. (NYSE: MOT), Sprint Nextel Corp. (NYSE: S), Washington Mutual Inc. (NYSE: WM) and Del Monte Foods (NYSE: DLM), as well as many airline companies like Northwest Airlines (NYSE: NWA) and JetBlue (NASDAQ: JBLU).

While those names could sound tempting for investors who may think they are cheap, BusinessWeek's Karyn McCormack reminds us that not everything that is cheap is a good bargain, and there are some risks that need to be taken into account.

One common problem for most of these stocks is that they trade under $10 for a reason. That reason is usually hardly any earnings growth, if any at all. And with a weak economy, these companies would have an even harder time to stimulate growth. Add to the mix the fact that institutional investors don't like to touch stocks under $10 and the potential for recovery is not good.

Continue reading BusinessWeek: Be wary of stocks under $10

Motorola CEO predicts 'make everything mobile'

Motorola (NYSE:MOT) CEO Ed Zander stood up and gave a speech yesterday at the opening of the Consumer Electronics Show with a vision of all consumer electronics "going mobile". Um, Ok -- really? When I delved into the details of what he meant, some of what he said made sense while other pieces of the speech made little to no sense. Chalk it up to another executive "setting the future" for customers by possibly not understanding the customer in the first place.

Now, it's common knowledge that many companies create the marketplaces they sell and operate in and end up convincing customers to products and services where a pre-existing consumer need was either 1) not needed at all or 2) was untapped, but existed. Motorola wants to create that "everything mobile" future and then get customers into buying the vision it created.

As the saying goes, if the demand is lacking, create it. But customers are smarter than that, and can quickly weed out subpar offerings even with the almighty marketing glitz and spin that can occur when Harvard MBAs go crazy on the marketing train.

Zander is not that crazy -- some of his ideas about the potential for mobility in emerging countries (where wireless penetration is just starting to explode) are excellent sources of future revenue that should treat holders of MOT well if Motorola can execute. But, in established markets, I'm not sure "everything" will need to go mobile. If so, I'll be buying stock in battery companies -- as all these devices will need tons of portable power sources.

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Last updated: November 14, 2009: 09:58 AM

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