smart phones are eating the world
DESCRIPTION
Smart Phones are Eating the World. Team : Investomics. Nima Behkami , PhD Deep Agnani , PhD Amjad Husain, PhD. Bridge between: Wireless Networks and Personal Computing. 3.2 billion (mobile operators) vs 1.7 billion people (PC). Growth opportunity. - PowerPoint PPT PresentationTRANSCRIPT
Smart Phones are Eating the World
Team: Investomics
Nima Behkami, PhD Deep Agnani, PhD Amjad Husain, PhD
Bridge between: Wireless Networks and Personal Computing
3.2 billion (mobile operators) vs 1.7 billion people (PC)
Growth opportunity
• Two-thirds of the mobile phone market has yet to convert to smartphones.
• Close to a billion smartphones will be sold in 2013, while PC sales will gradually decline.
• Existing Markets and Emerging Economies
Mobile Value Chain
Phone Data Plan Content
Investomics Focus
• Mobile phone handset business• Wireless network operators• Mobile content providers
handset
Mobile content
network
Communication Funds (US News)• General attributes of communication funds:
– Concentrate on telecommunication and media companies of various kinds
– Combination of cable television, wireless communication, communication equipment firms and traditional phone companies
– Some favor entertainment firms (broadcasters, film studios, publishers, on-line service providers)
Top Two Communication Funds (US News)• T. Rowe Price Media And
Telecommunications Fund (PRMTX)– Common stocks of media,
technology and telecommunications
– 80% of net assets in companies engaged in internet, publishing, movies, cable/satellite, TV, telephones, cellular services, technology and equipment
– Invest in companies in large-to-mid-capitalization range
– Average risk (compared to similar funds as per Morningstar)
– Trailing returns:• Year to date: UP 11.9%• One Year: UP 17.8%
– Expenses: 0.81%– Total Assets: $2.74B
• ProFunds Telecommunications UltraSector Fund (TCPIX)– Non-diversified– Seeks daily investment results,
before fess and expenses, that correspond to 1.5X the daily performance of the Dow Jones U.S. TelecommunicationsSM Index
– Invest in securities and derivatives that should have similar daily characteristics as 1.5X the daily return index
– Above Average risk (compared to similar funds as per Morningstar)
– Trailing returns:• Year to date: UP 24.7%• One Year: UP 40.6%
– Expenses: 1.78%– Total Assets: $5.44M
T. Rowe Price Media and Telecommunications Fund
6 Month
1 year
5 year
Dow Jones
S&P 500
Nasdaq Composite
ProFunds Telecommunications UltraSector Fund
6 Month
1 year
5 year
Dow Jones
S&P 500
Nasdaq Composite
Approach
• Similar to T. Rowe Price but no movies (i.e. if movies is the major asset / earner for the company than may not invest in stock)
• Major invest in companies in large-to-mid-capitalization range
• Will invest in smaller companies if technology / service may be regarded as “break-through”
Research Methodology• Focus on growth stocks in telecom sector.• P/B: <5; • EPS growth past five years: Positive; • Net profit margin: Positive; • Performance (Rate of return): Quarter up; P/E: 5-25; • Sales growth past five years: Positive; • Return on equity: Positive (but cautiously: if company has large debt
then should be raising funds by issuing stock rather than borrowing); • We consider the probability that the two-thirds of the mobile phone
market has yet to convert to smartphones. Developed and emerging economies are going to do well in the telecom sector in coming decade.
• Holding period on our stock: 6 months to 2 years.
Selected stocksWireless Providers:• AT&T Inc• Vonage Holdings Inc (VG)• Premier Global Services (PGI)• Globecomm System Inc (GCOM)• Lumos network Corp (LMOS)• Extreme Networks Ltd (EXTR)• NeuStar Inc (NSR)
Emerging Economies (India):• Bharti Airtel (BHARTIARTL)• Idea Cellular (IDEA)
Data Storage Companies:• Brocade communication systems Inc (BRCD) • Western Digital Corp (WDC)
Macro Indicators
• GDP• Employment Numbers• Walmart Sales• Manufacturers' new orders for non-
defense capital goods• Index of consumer expectations