Israeli cell phone carrier Cellcom Israel Ltd. (NYSE: CEL) is trading higher on almost 4 times average daily volume. While no reason has been given for the surge in volume, this weekend is extremely important for the Israel cell phone industry. Starting in December, number portability takes effect; meaning that customers will be free to take their phone numbers with them to any carrier they choose. No one is quite sure what will happen, but the anticipated marketing onslaught to persuade consumers to switch carriers, hasn't really materialized.
Three weeks ago the company reported a rise in the number of subscribers and a 47 percent jump in income from data and content and that revenue rose 7.2 percent to $392 million. Net profit rose more than expected in the third quarter, boosted by cost cuts and sharply higher revenue from data and content services. Israel's largest mobile phone operator posted net profit of $67 million, or 68 cents per diluted share, compared with $33 million or 34 cents a share a year earlier.
With a PE of 15.50 and a dividend yield of 8.5%, the stock is an attractive play for investors who want some exposure to the Israeli domestic economy.
But it's important to keep in mind that with cellular penetration of 120% and potential surging marketing costs just to keep existing customers, let alone trying to get new ones, Cellcom may be in for some volatility.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 11/29/07.
This post was part of AOL Money & Finance's Best & Worst of 2007 feature. The voting has now closed and readers have chosen Google Inc.as the company of the year. Be sure and let us know in the comments if you are pleased with this result.
Corporate America, the markets, and Wall Street are lumbering through a so-so year -- one likely to be characterized by mediocre U.S. GDP and earnings performance, along with ample portions of market volatility.
To be sure, no one will confuse 2007 with a peak year during the "Roaring '20s" or even the "Roaring '90s." Still, there were several standout performances, which we summarize in our "Company of the Year" award.
Facebook
Facebook deserves an honorable mention. The online directory shows considerable promise as an online community and networking device. Provided information is kept confidential and is not released or sold to unauthorized third parties, the business model can serve as another meeting room for groups that might not otherwise be able to meet for geographic or other reasons.
Walgreen (NYSE: WAG) implied volatility Flat into 10/1 EPS & Outlook. WAG will report EPS on 10/1. WAG October option implied volatility of 20 is near its 26-week average according to Track Data, suggesting non-directional risks.
Palm(NASDAQ: PALM) October volatility Elevated into full EPS on 10/1. PALM is recently up .36 to $16.76. PALM introduced the Palm Centro, a smart device, priced at $99 on 9/27. PALM will announce full financial results on 10/1 after pre-announcing EPS on 9/19. PALM's new handset operating system for its Treo product line is expected to be released in late 2008. PALM October option implied volatility of 54 is above its 26-week average of 37 according to Track Data, suggesting larger risk.
Sprint Nextel (NYSE: S) had a mediocre quarter, but that was an improvement on the recent past. The company still has to pray its national WiMax initiative will draw subscribers when it gets going next year.
Revenue rose about 2% to $10.2 billion. For the second quarter, diluted earnings per share (EPS) from continuing operations were 1 cent, compared with 10 cents a year earlier
Perhaps the most important thing about the wireless company's numbers is that it is not losing customers. According to the company's earnings release: "Post-paid net additions increased more than 235,000 from the first quarter and were a positive 16,000 for the quarter." The churn rate of customers dropped to 2% from 2.3% in Q1, the immediately previous quarter.
Sprint is the odd company that gets a market benefit from not doing worse. If it were doing better, imagine the windfall for shareholders. Over the last year, the company's stock is up about 23%. On earnings news, shares are up another 3% this morning.
Now, the market gets to wait to see if Sprint's bet on WiMax will pay off. The company is using the new wireless broadband standard to build its high-speed network instead of opting for the 3G technology being used by AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ).
Google (NASDAQ: GOOG) is opening a second front on its war to beat other search services from the desktop to the handset. The company already offers a version of its primary search service which works on mobile devices. But, its latest technology will allow users to search a large library of ringtones, games, and other services which they can then purchase. Google will probably offer premium positions on the search page that will be sold to make the company money.
According to The Wall Street Journal (subscription required), Google has been working with content providers for several months to index their products.
The new service will be troubling to two sets of companies. Cell service providers like AT&T (NYSE: T) already offer ways for their customers to buy products like ringtones. And, the cell companies keep a piece of that purchase. The Google operation can by-pass that and allow consumers to use its own CheckOut service to buy content.
The other group of companies that should be troubled by this are existing search companies like Ask (NASDAQ: IACI) and Microsoft (NASDAQ: MSFT). Each compelling new product that Google puts on handsets gives it a foothold in the market and pushes it closer to the dominant position it has on the desktop.
And you thought you got a lot of annoying phone calls from telemarketers and the like. UCLA student Shira Barlow received a new phone number from her wireless provider after she broke her phone, but there was just one problem: It wasn't a new number. It was a recycled number and not too long ago, it had belonged to Paris Hilton.
According to E! News, Ms. Barlow received text messages and phone calls from Paris's friends asking for information about parties, and they also offered their support for her during her upcoming stay in jail. Once the heiress was in jail of course, the calls tapered off. After her appearance on Larry King, Barlow received a text saying that "It's disgusting how they treated you in there, but once again you have showed the world that you can do anything."
Interestingly, Barlow has opted not to change her number, according to the Los Angeles Times, because the messages from Paris's friends have been more entertaining than annoying.
I wonder how many people would opt not to change their numbers. I'm guessing most young people would get a kick out of "being" Paris Hilton, at least on the phone. It's fun to feel like a celebrity.
The International Trade Commission (ITC) has banned imports of some cell phones containing chip technology from Qualcomm (NASDAQ: QCOM). The ITC has said that the ban covers cell phones that infringe on a patent held by Broadcom (NASDAQ: BRCM) and that were imported for sale after June 7. The majority of the cell phone import world is up in arms, claiming that the ban will do irreparable harm to the American consumer. Frankly, those that choose to infringe on patents shouldn't be importing technology they aren't ready to sit on when discovered.
James Gerace, spokesman for Verizon Wireless, claims that the ban "essentially attempts to freeze innovation in cell phones." A more accurate interpretation would be that the ban seeks to freeze piracy that circumvents innovation. A Red Herring article says that Sprint Nextel (NYSE: S) has openly declared that it expects to sell 5 million phones this year that contain the infringing technology. That's a pretty bold statement by Sprint, and in light of the current ban, I think it's a pretty stupid statement also. That would be similar to me stopping at the local police station to tell them I plan on driving over the speed limit for 500 miles this year.
AT&T (NYSE: T) doesn't seem to care much about the cell phone ban. It has plenty of handsets available that don't contain the infringing chips. AT&T thought ahead and based the majority of its offering on a different technology. Might we call that decision prudent?
Meanwhile, as the pirates cry and whine about appeals and a stay of execution, Broadcom has eloquently made clear that it will consider discussion about licensing of the patent.
They're calling it e-paper and it seems to be the coming thing. Imagine having one thin flexible sheet upon which you could display most anything you wish to watch or read. Sony Corporation (NYSE: SNE) is said to have developed a razor thin, flexible display utilizing their organic thin-film transistor technology and organic electroluminescent display. Other companies are working on similar technologies, but Sony is laying claim to the display with the greatest flexibility. This blog on CFA's space gives some interesting snippets regarding Sony' position in the race to bring flexible display technology into the consumer realm.
Once again we are looking at an impending technological advancement that could have significant beneficial effects. I'm sure that ergonomic consumer electronics engineers are watching this scenario with glee. Imagine a Research In Motion (NASDAQ: RIMM) BlackBerry that will slip into your back pocket and fit the curve of your butt cheek, or think about a PC that you could wear as a wrist band all day. When developers merge flexible display technology with something like Motorola's (NYSE: MOT) self-powering display technology (and they will), we're going to be treated to mobile electronics that only a few of us ever imagined were possible.
If Carl Icahn wins a seat on Motorola Inc.'s (NYSE: MOT) board of directors, Chief Executive Ed Zander will be looking for another job. That might happen if Icahn looses too.
The billionaire activist investor today stepped up his campaign against Zander ahead of the company's annual meeting on Monday with full-page advertisements blasting the embattled CEO, according to the Wall Street Journal (subscription required). He criticized comments Zander reportedly made about "hating" his customers as being "straight out of Alice in Wonderland."
How Zander and Icahn will be able to work together if the one-time corporate raider prevails is beyond me. I also wonder how effective Zander can be following Ichan's brutal proxy fight.
In an effort at damage control, Motorola said Zander was "joking" about "hating" Motorola's customers, the Journal said. Shareholders, though, seriously have found little to like about Motorola who stock has plunged more than 18% this year. The company's recent first quarter earnings were lousy and the second quarter isn't looking that great either.
Though proxy battles aren't easy to win, Icahn stands a good chance of prevailing with Motorola. Icahn probably wouldn't stay on the board for long anyway if he won. He doesn't seem to operating companies as much as shaking them up.
We've all experienced unsatisfactory customer service at some point. Slow service from a bartender, inattentiveness in a clothing store, interminably futile telephone conversations with utilities companies. Some of us can quickly brush aside these transgressions; others might take comfort in writing a strongly-worded letter (or seven).
One Korean man, Kim (the lone name that has been released in the press), took a slightly more dramatic approach, barreling a friend's borrowed Mercedes S500 into the South Korean lobby of SK Telecom's (NYSE: SKM) offices. Consumerist.com quoted Kim as saying: "The Samsung Anycall call phone that I bought from a [SK Telecom] distributor . . . didn't work at all."
Before taking these drastic measures, the disgruntled consumer said he placed 16 calls to his carrier's customer service department and visited the head office twice. An employee suggested Kim simply replace his phone with a newer model because the old version was no longer available.
No word yet on the repercussions facing Kim (on the part of either Samsung or his friend from whom he borrowed the Mercedes.)
As an admitted gadget idiot, I ought to be drawn to Verizon Communications Inc.'s (NYSE:VZ) Chocolate and Sprint Nextel Corp.'s (NYSE:S) Fusic phones. After all, wouldn't it be better to have one device to play your music and make telephone calls. It's one less expensive thing that can be left in a restaurant or lost in a taxi. Still, I am not ready to take the plunge yet.
Apple Computer Inc.'s (Nasdaq:AAPL) iPod is so simple to use that even a caveman can use it. I really don't care for now that I can't make a phone call over my iPod. I would rather have a good MP3 and a good cell phone rather than a mediocre device that does multiple things.
That's why I am curious about what will come of the reported alliance between Apple and Cingular. CNNMoney points out that if the report in the Wall Street Journal proves accurate, this is bad news for Verizon and Sprint, which unlike Cingular use CDMA technology while Cingular uses the more common GSM. Other attempts to sell iPod phones have flopped because they weren't very good.
For technophobes like me to buy a new device, it has to be durable (we drop stuff a lot) and easy to use. I can be persuaded to give up my temperamental iPod if something great came along to replace it. Ditto for my cell phone. So, I'll check out what's going to come out from Apple and Cingular.
The companies might consider selling clips for their device like the ones kids have for their mittens. It would sure save me a lot of aggravation.
This post is written as part of AOL Money & Finance's Best & Worst 2006. If you are rooting for satellite radio, cast your vote.
Back when Sirius had almost no subscribers, Sirius Satellite Radio Inc. (NASDAQ:SIRI) traded for $63. That was six years ago. XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) was $45 then. But now Sirius trades at $4 on a good day and XM changes hands around $15. These businesses looked better on paper than they did once they were operating companies. XM will end the year with something short of eight million subscribers. Revenue in the last reported quarter was $240 million. Sirius had revenue of $167 million for the same period.
But it's unlikely that early investors thought these companies would have balance sheets with over $1 billion in debt, or that they would still be losing money in 2006.
To a large extent, what happened was competition. The iPod was launched in 2001, and no one thought that within five years it would sell 70 million units. The number of cars that have built-in iPod adapters grows each day -- they even put them in BMWs.
How could satellite radio investors have looked ahead and seen the cell phone as a portable music player? There are currently two billion cell phones in "circulation" and a billion more are sold each year. Nokia Corporation (NYSE:NOK) thinks it will sell 80 million music phones this year.
Observing the world of mobile phones, Jim Cramer said that handsets have been one of the greatest growth drivers around and best money-makers. He thinks the uncertainty presented by international governments just helps cell phone makers. The company that can produce the cheapest, he says, and deliver that into the third world will be the winner. He thinks that Nokia Corporation (ADR) (NYSE:NOK) can do this, and he thinks that NOK is the one to buy. He likes NOK for this reason more than he likes Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) or Motorola, Inc. (NYSE:MOT).
Cramer said they are the lowest-cost provider and they might be selling them at subsidy levels, but he thinks they are establishing brand loyalty in those markets. He thinks Nokia will have the biggest footprint out of the cellphone makers, and as their middle classes grow so will Nokia.
Do those in international markets have brand loyalty? If they go cheap now and that gets established as "the cheap intro brand" then won't the upwardly mobile go look for sa step-up? He might be right here, and he might not. The stock may even go up from here, but I would be willing to bet that it is for different reasons. We'll see.
What kind of cellphone do you use? If you're in the majority, it's a Motorola handset. Motorola now has -- by far -- the largest share of the handset market in the U.S. and appears to be making a global run at Nokia to try and regain the top global spot for the first time in a decade. The jury is still out on whether Motorola can do this, but if the ultra-popular RAZR phenomenon continues -- and it does almost two years after release -- then Motorola will continue to make headway. It's rare that a single product carries a company like this, but just like Apple's iPod, Motorola's RAZR re-defined the category.
But it does not stop there. According to Forrester Research, Motorola is one of the top trusted brands in the wireless market, which includes hardware manufacturers and wireless carriers alike, from Motorola and Samsung to Sprint Nextel and Cingular Wireless. Samsung and Sprint Nextel rank among the least-trusted brands in the U.S., while Motorola and Verizon Wireless coming in at most-trusted levels, with Cingular Wireless and T-Mobile also pulling the same score. Just slightly off was Sprint Nextel, but that slightness was enough for a "least trusted" rating.
How about wireless handset manufacturers? In what I consider more perception than actual reality, handset makers Palm scored 4.3 and a B+ overall, while Motorola -- maker of the RAZR and other popular offshoot handsets, scored 4.2, for an overall grade of B. LG Electronics and Samsung fared the worst, both scoring 4.0, for overall grades of C- and D-, respectively. The "aura" around the Treo line of smartphones and the RAZR line of phones is probably due to the enormous loyalty customers have to both brands when such a subjective topic of "trust" comes along.
Samsung and LG and other makers have wireless handsets that topple the Motorola RAZR and other phones in terms of features and ease-of-use, but the sheer popularity and loyalty Motorola users have cannot be underestimated. If you create the market -- like the RAZR did for slim phones and the Treo did for on-the-go productivity -- then customers will always have "trust". MOT shares seem happy these days as a result.
Brian White has worked in various executive positions in technology and telecommunications and now focuses on editing and writing.
Corporate America, the markets, and Wall Street are lumbering through a so-so year -- one likely to be characterized by mediocre U.S. GDP and earnings performance, along with ample portions of market volatility.
Walgreen
Sprint Nextel
We've all experienced unsatisfactory customer service at some point. Slow service from a bartender, inattentiveness in a clothing store, interminably futile telephone conversations with utilities companies. Some of us can quickly brush aside these transgressions; others might take comfort in writing a strongly-worded letter (or seven). 
This post is written as part of AOL Money & Finance's Best & Worst 2006. If you are rooting for satellite radio, 
What kind of cellphone do you use? If you're in the majority, it's a Motorola handset. Motorola now has -- by far -- the largest share of the handset market in the U.S. and appears to be making a global run at Nokia to try and regain the top global spot for the first time in a decade. The jury is still out on whether Motorola can do this, but if the ultra-popular RAZR phenomenon continues -- and it does almost two years after release -- then Motorola will continue to make headway. It's rare that a single product carries a company like this, but just like Apple's iPod, Motorola's RAZR re-defined the category.
Comfort Zone Investing: Oil's down, which is a start, but not good enough
Stocks have their worst week in six years
Why haven't the Republicans said much about the economy?
