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Ciena Surges on Robust Telecom Spending

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After Cisco (click ticker for report: ) CEO John Chambers hinted at an acceleration in enterprise spending, network specialist Ciena (click ticker for report: ) reported much stronger than anticipated second quarter results Thursday. Revenue jumped 6% year-over-year to $508 million, smashing consensus expectations. Non-GAAP operating profit was halved to $0.02 per share, but that was better than the expected loss. On a GAAP basis, the firm still lost $0.27 per share. Cash flow for the year isn’t great as the company greatly expanded its accounts receivable, but we figure this will even out as the year progresses. What drove growth during the quarter? We’ve identified a few factors. Capital investment from the American wireless carriers is returning, even if the … Read more

Amazon’s Expansion Knows No Bounds

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On Tuesday, we received a variety of information about Amazon’s (click ticker for report: ) expansion into different product lines. The company is looking to expand its AmazonFresh same-day grocery delivery service and could enter as many as 40 markets this year. Additionally, the firm entered into the highest streaming content contract ever, purchasing the rights to stream over 4,000 episodes of Viacom (click ticker for report: ) TV shows. Let’s dig into the details. AmazonFresh For years, people have speculated that the end-game for Amazon was to build so many warehouses that it could effectively offer same-day shipping on any product and compete with brick-and-mortar shops on the basis of time. Thus, the expansion of AmazonFresh comes as little … Read more

Ergen Chooses Sprint Over DirecTV

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Monday morning, satellite TV provider Dish Network (click ticker for report: ) made a bold offer to merge with the United States’ third largest cellular carrier, Sprint (click ticker for report: ). The deal represents a valuation premium to SoftBank’s offer $20.1 billion offer for 70% of shares, and we believe Sprint’s board must consider the superior offer, which equates to $4.76 per share in cash and $2.24 per share in Dish stock, valuing Sprint at $25.5 billion. CEO Charlie Ergen is no stranger to bold moves, and many believe he’s had his eye on Sprint for a some time. Although we thought a DirecTV (click ticker for report: ) merger was more likely to occur, the Sprint deal makes … Read more

Will T-Mobile’s iPhone 5 Deal Change the Wireless Industry?

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Tuesday afternoon, wireless carrier T-Mobile finally relented and announced that it will begin carrying Apple’s (click ticker for report: ) iPhone. Bears can attack market share numbers all day, but we’ve shown plenty of evidence supporting why the iPhone is exceptionally popular. Commscore showed data giving Apple 37.8% market share in January, Verizon (click ticker for report: ) reported that iPhones accounted for 63% of smartphones during the fourth quarter, and AT&T (click ticker for report: ) had iPhones account for 84% of its smartphone mix during the same period. Demand for the product remains robust, in our view. Regardless, T-Mobile’s iPhone strategy is a stark departure from industry norms. T-Mobile will finance the phone, allowing consumers to purchase an … Read more

Could the FCC Hurt Carriers’ Profits?

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Reports have surfaced that the FCC wishes to create a free, nation-wide WiFi network in order to facilitate web and cellular traffic. Though plans are only in the initial stages (and we are not jumping to any conclusions), the government could provide the US with a high-speed network at no cost, helping to put the nation on par with the Internet service achieved in several other countries. The news does not alter our fair value estimates for companies in our coverage universe, pending new details regarding probability and timing of implementation. Understandably, the companies that currently own spectrum and experience fantastic returns on networks are a bit upset about the possibility. The high margins achieved by wireless operators Verizon (click … Read more

AT&T Sells Just a Couple of iPhones…8.6 Million!

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Wireless carrier and cable provider AT&T (click ticker for report: ) announced satisfactory fourth-quarter results Thursday afternoon. Revenue grew just 0.2% year-over-year to $32.6 billion, which was stronger than the consensus had anticipated. Earnings, adjusted for significant expenses, jumped 10% year-over-year to $0.44 per share, slightly below consensus expectations. Perhaps the most significant read-through from the quarter came from AT&T’s iPhone (click ticker for report: ) activations. The company activated approximately 10.2 million smartphones during the fourth quarter. Out of those 10.2 million phones, 8.6 million were iPhones, or 84.3% of total smartphones. The activations might suggest the iPhone is gaining popularity in the US. Contrary to the mainstream spin, Apple is doing quite well in the smartphone space. Solid … Read more

Verizon Continues to Outpace the Wireless Carriers

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Tuesday morning, wireless giant Verizon (click ticker for report: ) reported decent fourth quarter results. Verizon’s revenue during the fourth quarter was slightly better than consensus estimates, growing 5.7% year-over-year to $30 billion. Earnings, adjusted for special items including a $1.55 per share pension charge, fell 27% year-over-year to $0.38 per share, which was worse than anticipated, even after netting out a $0.07 per share impact attributable to Hurricane Sandy. Verizon’s wireless segment led the way, with service revenues jumping 8.5% year-over-year, to $16 billion, and total segment sales growing 9.5% year-over-year, to $20 billion. Customers continue to migrate to smartphone plans which carry higher prices and superior margins. Retail postpaid ARPA (average revenue per account) jumped 6.6% compared to the … Read more

Is a Cheaper iPhone in the Works?

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On the iPhone’s (click ticker for report: ) 6th birthday, rumors are swirling that Apple is working on a cheaper iPhone to compete with the dozens of smartphones its competitors release every year. Since shares have fallen nearly $200 from the mid-September peak, investors and other market participants seem worried that Apple is losing its luster, and that consumers prefer the Galaxy SIII and the Note. Plus, market share data out of both Europe and China has been relatively bearish. Our confidence in Apple hasn’t been shaken, as we focus on what’s far more important for a company than market share: profits. We think investors are reaching to explain the recent share price decline instead of acknowledging that the company’s … Read more

Fiscal Cliff Averted; Aerospace Rallying

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After a volatile December, two of our favorite aerospace names, Astronics (click ticker for report: ) and EDAC Technologies (click ticker for report: ), are rallying significantly after a deal was finally reached to avert the fiscal cliff. Precision Castparts (click ticker for report: ), which had steadily moved higher during the fiscal-cliff ordeal thanks to optimism surrounding its planned acquisition of Titanium Metals (TIE), is also seeing strength today. We assumed both profit taking and overblown fears of defense cuts were the culprit behind the increased volatility, and it seems as though that could be the case. We continue to see substantial upside at these firms thanks to the massive, multi-year commercial aerospace backlogs of the large airframe makers. Our Best Ideas portfolio … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more