Buy American Tower (AMT)
I almost bought American Tower (AMT) for Jubak’s Picks on Friday. But the stock was hovering just below its 200-day average and I was afraid that a continuation of the euro debt crisis would push the stock below that support level. Instead of more crisis, however, Monday has brought a huge relief rally based on a $1 trillion rescue plan worked out by European Union leaders over the weekend. So I missed what I believe is the local bottom on Friday, but on Monday, with Friday’s risk reduced, the stock is still a great buy, in my opinion.
American Tower is in the business of building towers and then renting space on that tower to wireless companies. The profitability of a tower depends on how many sites on a tower American Tower can rent. With the current explosion in wireless data and broadband service, wireless companies need more tower space. Read more
Sell Qualcomm (QCOM)
You’ll pardon me, I hope, if I’m nervous heading into Qualcomm’s (QCOM) earnings announcement for the second quarter of fiscal 2010 on Wednesday, April 21. Last quarter Qualcomm shares dropped 14.3%–or $6.72 a share–on January 28, the day after the company released earnings for the first quarter of the 2010 fiscal year and announced guidance for future quarters. In its guidance Qualcomm executives predicted lower than expected revenue and earnings for the second quarter.
Since then the company has restored most of the decrease it predicted three months ago. But Qualcomm has a record of delivering earnings surprises—and the surprises aren’t always pleasant.
But that’s not the reason I’m selling these shares. Read more
Palm is for sale–RIMM, Apple, and Google crush smart phone pioneer
Palm, a pioneer in what turned into the smart phone market, has hired Goldman Sachs and Qatalyst Partners to find a buyer, according to Bloomberg.
Leading candidates, Bloomberg reports, are Taiwan’s HTC and China’s Lenovo Group (LNVGY). Lenovo recently repurchased its former mobile phone business from the group of former employees who had bought the unit in 2008 when Lenovo decided to concentrate on computers.
Palm shares were up 16.7% as of 12:30 ET this morning, April 12. Shares rose 32% last week on rumors of a takeover bid. The stock had been down 60% for 2010 before the recent moves.
Palm, No. 6 in the North American smart phone market in the fourth quarter of 2009, had bet a turnaround on its new Pre and Pixi smart phones based on its new WebOS operating software. But sales have been disappointing. Read more
Update Qualcomm (QCOM)
Now I don’t wish to sound ungrateful for today’s (March 25) pop in the stock, but I do have to ask Was this trip necessary?
Today, Qualcomm (QCOM) raised its outlook for fiscal second-quarter sales and earnings.
The company said it was shipping more chipsets for CDMA cell phones than it had expected.
Expected when? Read more
Update Marvell Technology Group (MRVL)
After the market closed yesterday (March 4) Marvell Technology Group (MRVL) reported fourth quarter fiscal 2010 earnings of 40 cents a share (excluding items). That was 3 cents a share above the official Wall Street consensus. Revenue climbed 64% from the fourth quarter of fiscal 2009 to $843 million, just a tad above analyst consensus. Strength came in storage (sales up 5%) and networking (sales up 10%).
The best news in the current quarter, however, came on gross margins, which climbed 2.2 percentage points to hit 60%. That’s an all-time high for the chip company and is significantly above the 58.6% gross margin expected by Wall Street.
Normally the first quarter of the company’s fiscal year—the quarter that ends in April—shows a 7% to 10% seasonal decline in sales. In that context Marvell Technology Group’s guidance to Wall Street for a flat to 2% decline in that quarter counts as a sign of major continuing strength for the company. So too does the company’s increase in gross margin targets going forward to 58% to 60%. That indicates that Marvell believes the new margins are sustainable and the savings from its cost reduction program aren’t based on one-time gimmicks.
The conference call wasn’t completely sunshine and buttercups, however. Read more
