Dow Jones Industrial Average 11,675 (UP) Week ending 01-07- 2011
Kinect for X-Box, IPTV, I-Phone and Android custom applications, Apple I-pads, Facebook, Twitter, YouTube, WIKI, streaming of video, data, and games in 2011, present an unbelievable level of communications, beyond anything ever known in the history of man. Historically, it reminds me of the Civil War, when the weaponry had so far advanced and exceeded the human behavior and the old tactics of war, that it led to a mass devastating destruction of human life. I hope we can get a grip on this rapid information flow.
I am sure the folks at the think-tanks like MIT, Harvard, Stanford and others are studying this new viral communications dynamic and trying to figure out its possible outcomes on world human behavior. I hope that we can garner a level of understanding to use these communication devices as tools for improving the human condition. My fear is that this new viral communication will amplify extremism, intolerance, prejudice, and divisiveness of political and religious views. I hope we can all get "smart" in a hurry, and use these smartphones and rapid communications for the good of our fellow man. (All our fellow men!).
I am not going to focus on the devices here, although I will be purchasing a Motorola Atrix when they come out from the new Motorola Mobility Holdings Inc. (Symbol MMI, $33.06) because I am brand loyal and have always used Motorola cell phones. Instead my thinking is to let the hardware sort itself out, and focus on the Cellular Carriers, who will make money no matter which combination of hardware customers use.
ROGERS COMMUNICATIONS B, (Symbol RCI, $34.57) is the traditional GSM carrier in Canada. I say traditional because Bell Mobility and Telus in Canada both have added HSPA 3G technology to their systems. Rogers has an 11 PE, and should have 2010 earnings of $2.84 a share and 2011 earnings of $3.14 each. Rogers has already started to charge Netflix an extra bandwidth fee for their streaming video delivery via Rogers.
AT&T Inc. (Symbol T, $28.85) has a 5.96% dividend yield and plenty of cash flow to keep it going. This stock has little downside risk with its gigantic revenue and earnings growth. AT&T has enjoyed a 24.45% 5 year sales growth and has enjoyed the exclusivity of having the Apple I-Phone but will be losing that advantage this year as the other carriers pick it up. This is the kind of steady stock you will want to own in your portfolio in 2011.
VODAFONE GROUP PL ADR (symbol VOD, $27.53) has a low PE of 10 and a 3.31% dividend. VOD has a one year Total Return of 34.4%. Vodaphone has a great worldwide coverage over a diverse group of countries. Earnings look like $2.68 for 2011 and $2.84 for 2012.
A couple of names I cannot recommend at this time are
AMERICA MOVIL ADR L of Mexico because of the unsettled nature of that country with the drug cartels and the associated risk to business. Verizon Communications Inc. has a balance sheet that has Current liabilities higher every quarter than Current Assets. Their balance sheet looks more like a cable company, with lots of depreciation, probably due to all their fiber deployment for FIOS. I just cannot tell what is going on here from the balance sheet. They do have a nice 5.43% dividend and seemingly good long-term implications with FIOS, LTE 4G cellular technology and adding the I-Phone from Apple.
Be careful buying stocks this year as there will be some sharp dips followed by periods of slow steady growth. Very nerve racking!
Keep an open mind,