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Zacks Analyst Blog Highlights: China Mobile, Alcatel-Lucent, China Unicom, China Telecom and Vodafone – Press Releases

Zacks Market Commentaries — Mon, 23 Nov 2009 13:07:34 +0000

For Immediate Release

Chicago, IL – November 23, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: China Mobile (CHL), Alcatel-Lucent (ALU), China Unicom (CHU), China Telecom (CHA) and Vodafone (VOD).

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Here are highlights from Friday’s Analyst Blog:

China Mobile Outlines 4G Plan

China Mobile has recently selected Alcatel-Lucent (ALU) for the responsibilities of design, construction, installation and integration of communication infrastructure to facilitate the 4G network trial. The TD-LTE network will provide advanced wireless services (including high-definition TV and ultra-fast broadband Internet access) to the visitors at the exposition.

The three major Chinese telecom operators China Mobile, China Unicom (CHU) and China Telecom (CHA) are investing heavily in Shanghai to improve the city’s network infrastructure, thereby ensuring the delivery of smooth network coverage for Word Expo 2010. China Mobile plans to invest RMB 15 billion ($2.19 billion) over the next three years in Shanghai.

China Mobile’s TD-LTE venture is being supported by the British telecom giant Vodafone (VOD).

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Zacks Investment Research

China Mobile Outlines 4G Plan – Analyst Blog

Zacks Market Commentaries — Fri, 20 Nov 2009 16:23:53 +0000

China Mobile (CHL), the world’s largest wireless carrier by subscriber, has revealed its plan to commence the trial run of its 4G network during World Expo 2010 to be held in Shanghai from May 1 to Oct 31, 2010. The company’s 4G service is based on the TD-LTE (Time Division Duplex Long Term Evolution) mobile broadband technology. Roughly 200 participants and 70 million visitors are expected to assemble at the Expo.

China Mobile has recently selected Alcatel-Lucent (ALU) for the responsibilities of design, construction, installation and integration of communication infrastructure to facilitate the 4G network trial. The TD-LTE network will provide advanced wireless services (including high-definition TV and ultra-fast broadband Internet access) to the visitors at the exposition.

The three major Chinese telecom operators China Mobile, China Unicom (CHU) and China Telecom (CHA) are investing heavily in Shanghai to improve the city’s network infrastructure, thereby ensuring the delivery of smooth network coverage for Word Expo 2010. China Mobile plans to invest RMB 15 billion ($2.19 billion) over the next three years in Shanghai.

China Mobile’s TD-LTE venture is being supported by the British telecom giant Vodafone (VOD). In addition to Alcatel-Lucent, the company has also selected Ericsson (ERIC), Motorola (MOT), Nokia Siemens, Huawei Technologies and ZTE Corp as the primary technology vendors for the upcoming 4G project in Shanghai.

China Mobile’s TD-LTE network will enable downlink speeds of 60 megabits per second (Mbps), which is 20−30 times faster than the average throughput levels offered by existing 3G networks. China Mobile plans to allocate approximately 60% of its capital expenditure over the next few years to develop its 4G network.

The company’s recently accelerated development plan for TD-LTE stems from the uncertainties related to the success of its TD-SCDMA technology based 3G services. China Mobile is facing challenges regarding the adaptability and performance of this indigenously developed 3G standard.

European and American 3G standards such as WCDMA and CDMA2000, which have been adopted by China Unicom and China Telecom, respectively, offer faster network speeds and already enjoy wide acceptability in the marketplace. Additionally, TD-SCDMA also suffers from certain limitations when it comes to international roaming. These issues may restrict a wider adoption of China Mobile’s 3G network.

China Mobile aims to leverage the 4G TD-LTE opportunity to offset the limitations of the 3G TD-SCDMA network. Moreover, this move will also provide an opportunity to leapfrog the company’s Chinese peers to emerge as the first carrier to deploy 4G LTE based mobile broadband network in China, representing a significant competitive advantage.

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Zacks Investment Research

Telefonica Tops on Lighter Sales – Analyst Blog

Zacks Market Commentaries — Thu, 12 Nov 2009 18:05:41 +0000

Telefonica (TEF) reported third-quarter 2009 results with earnings per ADS of US$1.88, comfortably beating the Zacks Consensus Estimate of US$1.49. The Spanish telecom giant reported net income of €1.99 billion (US$2.85 billion), down 0.6% year over year, due to lower sales as a result of the beleaguered economy, especially in Spain.

Revenue

Consolidated revenue fell 5.7% year over year to €14.1 billion (US$20.2 billion). Revenue was impacted by weak contributions from domestic and European markets due to the recession. Latin America contributed 40% of the group revenues followed by Spain at 35% and Europe at 25%.

Result by Segments

Telefonica Espana

The company’s Spanish revenue declined 8.9% to €4.9 billion (US$7 billion), impacted by a reduction in mobile termination rates (inter-operator fees) and the economic downturn. Wireline business revenues fell 9.4% year over year to €2.9 billion (US$4.1 billion) while revenue from wireless operation declined 6.4% to €2.3 billion (US$3.3 billion).

Telefonica Europe

Revenue from Europe declined 5.5% year over year to €3.5 billion (US$5 billion), especially due to lower revenue from the UK operation. Reported revenue from O2 UK (the company’s UK wireless operation and highest contributor to European sales) was €1.7 billion (US$2.4 billion), down 7% over the year-ago quarter, due to competition and termination rate cuts. Revenue from Germany increased 5.5% while in the Czech Republic they declined 15.7%.

O2 UK continues to struggle, with declining revenues as the operator faces intense competition, especially from its biggest rival Vodafone (VOD). Competition is set to intensify in the British mobile market as the other two major carriers Deutsche Telekom (DT) and France Telecom ((FTE) have finalized an agreement to merge their UK operations. The integrated company will dethrone Telefonica as the largest wireless carrier in the UK.

Telefonica Latin America

Revenue from Latin America, which has been the principal growth engine for Telefonica in the past quarters, also fell 2.3% year over year to €5.6 billion (US$8 billion). This is due to revenue declines across key markets such as Brazil, Argentina and Chile. Revenue in Brazil (the largest market) declined 8.9% year over year to €2.2 billion (US$3.1 billion), due to weaker contribution from its Brazilian subsidiaries, Vivo and Telesp.

Telefonica continues to lead the Brazilian wireless market with approximately 30% market share. The company recently made an all-cash bid to acquire Brazilian telecom operator GVT Holding SA in an effort to expand its presence in the lucrative Brazilian telecom market.

Subscriber Results

At the end of the third quarter, total customer access points reached approximately 268.6 million, up 6.6% year over year. Subscriber accretion was driven by healthy growth in wireless, broadband and Pay TV services.

Total retail broadband access grew 9.8% year over year to 13.2 million, boosted by the rapid adoption of bundled services (dual or triple play service packages). Total wireless access reached 205.9 million, with roughly 5 million net additions made during the quarter, driven by contributions from Brazil, Germany, Mexico and the UK. Pay TV access was 2.5 million, up 15.1% year over year.

Spain exited the quarter with 47.3 million access lines and 24 million wireless customers. Total customer access in Latin America reached 163.7 million with nearly 3 million net additions in the quarter. Europe registered 48.6 million accesses (up 8% year over year), with the mobile customer base growing 7.3% year over year to 43.5 million.

Outlook

Telefonica has reaffirmed its financial guidance for 2009 as it expects continued increases in consolidated revenues with annual OIBDA growth projected in the range of 1 - 3%. Annual operating cash flow growth is expected in the range of 8 - 11%. Capital expenditure for 2009 is projected below €7.5 billion (US$10.2 billion), lower than 2008 level, as the company is increasingly focused on reducing spending to improve cash flow generation.

The company remains committed to expanding its 3G wireless business as it has reportedly begun a commercial roll-out of its HSPA+ technology based 3G mobile broadband network in Spain that offers peak downlink speeds of 21 megabits per second. Telefonica is also set to conduct 4G network trials in six countries across Europe and Latin America during the next six months.

Telefonica has expanded its handset portfolio with the recent launch of Palm Inc’s (PALM) Pre smartphone in the UK, Spain, Ireland and Germany. The company is also aggressively pursuing expansion initiatives into other emerging markets as it recently strengthened its foothold in China through an increased stake holding in China Unicom (CHU).

The company’s dominant position in the Spanish telecom market, attractive growth prospects in Latin America and healthy dividend payouts remain positive factors for investment considerations. However, we remain cautious with regard to Telefonica’s declining wireline business, aggressive acquisition strategy and highly leveraged balance sheet.
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Zacks Investment Research

Vodafone Profit Leaps, Lifts Savings – Analyst Blog

Zacks Market Commentaries — Wed, 11 Nov 2009 14:33:46 +0000

Vodafone Group Plc (VOD), the largest wireless carrier in the world by revenue, has announced interim results for fiscal year 2010 with adjusted net income of £4.58 billion (US$7.3 billion) increasing 15% year over year from £3.99 billion (US$6.4 billion) reported a year ago, driven by favorable exchange rate movements and reduced tax. Adjusted earnings exclude one-time items such as impairment losses.

Group Revenue & EBITDA

The telecom giant reported consolidated revenues of £21.8 billion (US$34.8 billion) for the period, representing a 9.3% year over year growth. Favorable exchange rate (euro-sterling) swings and net impact of merger and acquisition initiatives contributed to this growth. Excluding these impacts (organic basis), revenue declined 3% year over year.

Group service revenue declined 2.6% year over year on an organic basis to £20.5 billion (US$32.7 billion), primarily due to weaker contributions from European markets as recessionary conditions curbed demand for wireless services. Adjusted EBITDA increased 2.9% year over year to £7.5 billion (US$12 billion) driven by cost control.

Results by Segment

Europe

Revenues for the European segment increased 3% year over year (down 5.1% on organic basis) to £14.9 billion (US$23.8 billion). Service revenue in Europe declined 4.5% organically as growth in Italy and the Netherlands was more than offset by decreases across Spain, Germany and the UK due to a weaker economy, regulatory pressure and intense competition.

Decline in voice revenue continues to offset growth in data. Revenue in Germany and the UK remains under pressure due to mobile termination rate (inter-operator fees) cuts. Vodafone is also losing customers in the UK as subscribers switch to its major rival Telefonica’s (TEF) O2 which is marketing iPhone in the UK.

Moreover, Deutsche Telekom (DT) and France Telecom (FTE) have recently finalized an agreement to combine their UK units, which will create the largest mobile carrier in the UK.

Africa & Central Europe

This segment posted revenues of £3.7 billion (US$5.9 billion), up 36% year over year. Organically, service revenue fell 3.2% as consistent growth at Vodacom (South Africa) and increase in subscriber count were partly offset by weak contributions from Romania and Turkey. Service revenue at Vodacom increased 4.2% on an organic basis as a result of healthy subscriber accretion.

Asia Pacific & Middle East

Asia Pacific & Middle East segment continues to perform in line with expectation. Revenue surged 15.9% year over year (11.3% organically) to £3.1 billion (US$4.9 billion), driven by continued strong growth in India , the single biggest contributor to organic revenue growth. Service revenue in India increased 20.5% organically boosted by roughly 55% growth in wireless customer base amid intense price competition.

Subscriber Trends

During the six-month period, Vodafone registered roughly 20.6 million net new mobile connections across its operations, bringing the total subscriber base to 323.3 million (83.5% represented by prepaid). India continues to be a key driver for subscriber growth with a net addition of 14 million customers in the first six months of fiscal 2010.

In Europe, the company registered a net loss of 262,000 subscribers during the half-year period. Verizon’s (VZ) mobile unit, Verizon Wireless, in which Vodafone holds a 45% stake, however, posted a net addition of 1.1 million customers.

Outlook

Management has confirmed its outlook for fiscal 2010 with adjusted operating profit projected in the range of £11.0 billion to £11.8 billion (US$17.5 billion to US$18.8 billion), assuming a favorable foreign exchange environment. Free cash flow is projected between £6.0 billion and £6.5 billion (US$9.6 billion to US$10.4 billion).

Vodafone is aggressively pursuing its cost reduction program that includes workforce reduction in Europe . The company has increased its annual savings target to £2 billion (US$3.2 billion) by 2012 from £1 billion (US$1.6 billion) as per earlier expectation. Roughly 50% of the total savings is expected to be realized in 2011.

Moreover, Vodafone continues to accelerate 3G wireless service deployments and expand network availability across Asia, Eastern Europe and Africa. The company’s HSDPA technology based 3G mobile broadband network offers network speeds of 7.2 megabits per second (Mbps) across Europe.

Vodafone has recently upgraded its 3G network in the UK to offer peak download speeds of 14.4 Mbps. Efforts are underway to further upgrade the existing 3G HSDPA network to HSPA+ standard, which will offer future throughput up to 42 Mbps. Moreover, Vodafone is set to launch iPhone in the UK in early 2010.
Read the full analyst report on "VOD"
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Zacks Investment Research

Zacks Analyst Blog Highlights: France Telecom, Apple, Telefonica, Vodafone and Deutsche Telekom – Press Releases

Zacks Market Commentaries — Wed, 04 Nov 2009 13:15:56 +0000

For Immediate Release

Chicago, IL – November 4, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: France Telecom (FTE), Apple (AAPL), Telefonica (TEF), Vodafone (VOD) and Deutsche Telekom (DT).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s AnalystBlog:

Orange UK Confirms iPhone Launch

Orange will sell the iPhone to consumer and business customers through various price plans such as "pay as you go" (PAYG) and "pay monthly" basis. Under the PAYG plan, customers who top up £50 ($82) at purchase will get the iPhone 3G for £343 ($563), iPhone 3GS (16GB) for £440 ($722) and iPhone 3GS (32GB) for £539 ($884), along with 250MB of data usage per month and unlimited Wi-Fi (wireless broadband) access for a year.

Under the "pay monthly" option, iPhone 8GB, 16GB and 32GB models will be sold under a range of monthly plans. With a two-year service contract, iPhone 3GS (16GB) will be offered free on all £45 ($74) monthly tariff plans while iPhone 3G is free on £30 ($49) plans.

Orange sealed the marketing rights to Apple’s (AAPL) iPhones on Sept. 2009, which effectively ended Telefonica (TEF) O2 UK’s two-year exclusive distribution rights to sell the device in the UK. However, O2 UK, which has been offering the iPhone since Nov. 2007 and has amassed more than 1 million customers, will continue selling the handset in the UK. Moreover, Vodafone (VOD) is expected to market iPhones in the UK in early 2010.

Orange UK is currently the third-largest operator in the British mobile market with 21.5% share. However, the company remains challenged by the cut-throat price competition as its bigger rivals such as O2 UK and Vodafone continue to boost their respective market shares through aggressive product/price offerings.

To strengthen its foothold in the UK wireless market, Orange UK is merging with Deutsche Telekom’s (DT) subsidiary T-Mobile UK (the fourth-largest mobile carrier in the UK) under a 50-50 joint venture. The combined entity would dethrone O2 UK as the largest wireless operator in the UK, with roughly 37% market share.

iPhone represents a significant opportunity for Orange UK to further bolster its presence in the UK mobile market by attracting new high-end subscribers. The company will leverage its market leading 3G network to roll out the popular handset, addressing a significant portion of the UK’s cellular user base.

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Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Contact:
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Zacks Investment Research

Orange Confirms iPhone Launch – Analyst Blog

Zacks Market Commentaries — Tue, 03 Nov 2009 22:45:03 +0000

France Telecom’s (FTE) subsidiary Orange UK has revealed the iPhone launch date as the carrier will officially unveil the iconic handset in the UK on Nov. 10, 2009. Moreover, the operator has also released pricing and tariff details for iPhone 3G and iPhone 3GS, which will be sold through direct retail distribution channels including on-line stores, shops and telesales channels.

Orange will sell the iPhone to consumer and business customers through various price plans such as "pay as you go" (PAYG) and "pay monthly" basis. Under the PAYG plan, customers who top up £50 ($82) at purchase will get the iPhone 3G for £343 ($563), iPhone 3GS (16GB) for £440 ($722) and iPhone 3GS (32GB) for £539 ($884), along with 250MB of data usage per month and unlimited Wi-Fi (wireless broadband) access for a year.

Under the "pay monthly" option, iPhone 8GB, 16GB and 32GB models will be sold under a range of monthly plans. With a two-year service contract, iPhone 3GS (16GB) will be offered free on all £45 ($74) monthly tariff plans while iPhone 3G is free on £30 ($49) plans.

Orange sealed the marketing rights to Apple’s (AAPL) iPhones on Sept. 2009, which effectively ended Telefonica (TEF) O2 UK’s two-year exclusive distribution rights to sell the device in the UK. However, O2 UK, which has been offering the iPhone since Nov. 2007 and has amassed more than 1 million customers, will continue selling the handset in the UK. Moreover, Vodafone (VOD) is expected to market iPhones in the UK in early 2010.

Orange UK is currently the third-largest operator in the British mobile market with 21.5% share. However, the company remains challenged by the cut-throat price competition as its bigger rivals such as O2 UK and Vodafone continue to boost their respective market shares through aggressive product/price offerings.

To strengthen its foothold in the UK wireless market, Orange UK is merging with Deutsche Telekom’s (DT) subsidiary T-Mobile UK (the fourth-largest mobile carrier in the UK) under a 50-50 joint venture. The combined entity would dethrone O2 UK as the largest wireless operator in the UK, with roughly 37% market share.

iPhone represents a significant opportunity for Orange UK to further bolster its presence in the UK mobile market by attracting new high-end subscribers. The company will leverage its market leading 3G network to roll out the popular handset, addressing a significant portion of the UK’s cellular user base.
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Zacks Investment Research

FTE Hurt by Economy & FX – Analyst Blog

Zacks Market Commentaries — Fri, 30 Oct 2009 14:47:59 +0000

French telecom giant France Telecom (FTE) has reported operating results for third-quarter 2009 with revenue falling 6.4% year over year to €12.69 billion (US$18.1 billion), primarily due to unfavorable exchange rate fluctuations (British pound versus Polish zloty) and reduced mobile termination rates (inter-operator fees). Revenue was also hurt by the recession-driven discontinuation of landline phone use by customers.

EBITDA & Margin

France Telecom, which operates two of the leading telecom brands in Europe (Orange and Wanadoo), reported EBITDA of €4.6 billion (US$6.6 billion) which declined 8% from the year-ago quarter, resulting in a fall in EBITDA margin to 35.9% from 36.6%. This decline is a result of stringent price regulation and adverse currency exchange swings.

Revenue by Key Markets

Reported revenue in France (46% of group sales), the company’s largest market, declined 1.6% year over year to €5.9 billion (US$8.4 billion) largely due to a decline in legacy fixed-line business, partly offset by growth in wireless and data services.

The company’s second largest market, UK posted 15% year over year decline in revenue to €1.3 billion (US$1.9 billion) as a result of beleaguered economic conditions and regulatory pressure. The company’s UK operation (Orange UK) remains challenged by the cutthroat price competition as bigger rivals such as Telefonica’s (TEF) O2 UK and Vodafone (VOD) continue to boost their respective market share. Revenue in Spain and Poland fell by 4.7% and 29.3%, respectively.

Subscriber Trends

At the end of the quarter the company had 189.1 million subscribers across its vast operating territories, a 6.6% year over year increase, equating to 11.7 million net additions. Total cellular customer base grew 9.5% year over year to 128.8 million. Wireless subscriber accretion in the third quarter was healthy with 3.3 million net additions.

The company’s European subscriber base increased 35.5% year over year to 3.8 million (including 2.1 million in France). Momentum for ADSL broadband Internet also remains strong with 6% year over year growth in total customer base to reach 13.4 million at the end of the quarter.

Broadband usage was healthy as the Digital TV subscriber base increased 67% year over year to 2.9 million, while the VoIP customer base increased 22% to 7.3 million.

Outlook & Action Plans

France Telecom has reaffirmed its expectation of generating stable cash flow at the 2008 level of €8 billion (US$11.4 billion). Capital expenditure as a proportion of revenues is forecasted to be less than 12% in 2009 and the company is expected to spend more in the fourth-quarter. Revenue is expected to remain pressured due to economic and regulatory factors.

The company remains firm in its aggressive cost cutting initiatives as it aims to prevent EBITDA margin from further declines and to cope with the tighter regulatory environment.

France Telecom plans to retain its dividend policy with a distribution rate of 45% or more of organic cash flow while maintaining a healthy liquidity position. The company will continue its debt reduction policy as it targets to achieve a net debt to EBITDA ratio of less than 2. Moreover, France Telecom will continue to pursue acquisitions in high-growth markets.

To strengthen its foothold in the UK’s wireless market, France Telecom is merging its Orange UK operation with Deutsche Telekom’s (DT) subsidiary T-Mobile UK (fourth-largest mobile carrier in the UK) under a 50-50 joint venture. The combined entity would dethrone O2 UK as the largest wireless operator in the UK with roughly 37% market share. Orange UK is currently the third-largest operator in the British mobile market with roughly 21% share.

Orange UK also has won the rights to market Apple Inc’s (AAPL) iPhone (3G and 3GS) in the UK. iPhone represents a significant opportunity for the company to further bolster its presence in the UK’s mobile market by attracting new high-end subscribers.

France Telecom recently postponed all corporate restructuring initiatives until at least the end of 2009. The company is increasingly under pressure following a series of suicides by its employees, believed to be the result of continuous workforce restructuring. France Telecom recently revealed its plan to earmark €1 billion (US$1.5 billion) on account of a part-time job scheme to mitigate stress among its French workforce.

Note: France Telecom does not disclose net profit figure at the first-quarter and third-quarter stages.
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Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Vodafone, Conmed Corp., Caterpillar Inc., Coca Cola Company and Lockheed Martin Corporation – Press Releases

Zacks Market Commentaries — Wed, 21 Oct 2009 13:00:18 +0000

For Immediate Release

Chicago, IL – October 21, 2009 – Zacks Equity Research highlights Vodafone (VOD) as the Bull of the Day and Conmed Corp. (CNMD) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Caterpillar Inc. (CAT), Coca Cola Company (KO) and Lockheed Martin Corporation (LMT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We maintain our Outperform recommendation for Vodafone (VOD), the largest revenue generating international wireless carrier. Revenue growth in the last quarter was fuelled by foreign exchange gains and acquisitions.

Additionally, increase in subscriber base was driven by continued healthy net additions in its Indian operation. Vodafone's globally diversified operation provides hedging elements which offset price competition and translation risk that may arise in specific markets. The company continues to accelerate 3G wireless service deployments and expanding network availability across Asia, Eastern Europe and Africa.

Moreover, Vodafone is focused on improving shareholder returns through attractive dividend payouts. Management's outlook for fiscal 2010 remains favorable as operating results are expected to improve with continued growth across incipient markets coupled with ongoing cost saving initiatives and currency exchange translation gains.

Bear of the Day:

Conmed Corp. (CNMD) operates in highly competitive markets against competitors that are much larger, technically competent and possess substantially more assets.

Additionally, many of these competitors offer a range of products not matched by Conmed, which may make Conmed's offerings less attractive to surgeons, hospitals, and group purchasing organizations that are trying to reduce the number of vendors they do business with. In the second quarter, earnings per share were $0.17, compared to the Zacks Consensus Estimate of $0.16 and the year-ago earnings of $0.43.

We have an Underperform rating on Conmed with a target price of $18.

Vodafone Group, Plc (VOD) – Bull of the Day

Zacks Market Commentaries — Wed, 21 Oct 2009 05:00:00 +0000

We maintain our Outperform recommendation for Vodafone (VOD), the largest revenue generating international wireless carrier. Revenue growth in the last quarter was fuelled by foreign exchange gains and acquisitions.

T-Mobile and Orange to Unite – Analyst Blog

Zacks Market Commentaries — Fri, 02 Oct 2009 16:08:30 +0000

German telecom carrier Deutsche Telekom (DT) and France Telecom (FTE) are merging their UK operations in a 50-50 joint venture. The companies have initiated negotiations and an agreement is likely to be signed by the end of October 2009.

If and when the deal is finalized, Deutsche Telekom’s British subsidiary T-Mobile UK will combine with France Telecom’s Orange UK in a historic merger.

In the proposed deal, Deutsche Telekom will contribute T-Mobile UK, including the unit’s 50% stake in the 3G wireless joint venture with Hutchison, while France Telecom will add its UK broadband Internet business along with the wireless operation. The companies are likely to retain the Orange and T-Mobile brands for now to prevent customer defection. A new brand, however, is expected within two years.

The British mobile market is one of the most fiercely competitive markets in Europe. Currently, Spanish telecom giant Telefonica’s (TEF) UK subsidiary O2 leads the market with approximately 27.7% share.

Vodafone (VOD) and France Telecom’s Orange are the second-and third-largest operators with 24.7% and 21.5% share, respectively. T-Mobile UK is the fourth-largest operator with nearly 16.6 million subscribers and roughly 15% market share. However, the unit contends with declining profit and subscriber erosion.

The merger of T-Mobile UK and Orange UK will radically change the competitive landscape in the British mobile market. The combined entity would dethrone Telefonica’s O2 UK as the largest wireless operator in the UK with roughly 37% market share and a cumulative subscriber base of approximately 28.4 million.

The combined network assets will create significant cost synergies that may exceed 4 billion Euros ($5.7 billion), mostly through reduced operating and capital expenditure. The consolidated entity with greater scale, larger coverage markets and distribution network will operate and compete more efficiently while sharing the expenditure associated with future network upgrades.

In order to achieve merger synergies, the joint venture plans to invest up to 800 million Pounds ($1.3 billion) for network restructuring and streamlining operations. The merger is likely to be accretive to free cash flow and earnings from 2010 and 2011, respectively.
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Zacks Investment Research

LTE Ahead in 4G Race – Analyst Blog

Zacks Market Commentaries — Mon, 28 Sep 2009 18:18:40 +0000

Long Term Evolution (LTE) technology is ahead in the race as the most sought-after next-generation (4G) wireless network standard in the market. The 4G wireless networks are aiming to cope with substantial demand for high-speed wireless data services and mobile video.

LTE is an IP-based modulation standard and a set of enhancement for the existing Universal Mobile Telecommunications System (UMTS). This technology has been pioneered by the 3rd Generation Partnership Project (3GPP), a telecom industry body comprising wireless carriers and equipment vendors who have been buying and selling the same proprietary products for years.

Verizon Communication (VZ), the largest carrier in the U.S., and NTT DoCoMo (DCM), the largest carrier in Japan, are the first two companies to decide on implementing LTE–based networks by 2010. Vodafone (VOD), the largest mobile carrier globally on revenue count and AT&T (T) will implement LTE by 2012. Recently, China Mobile (CHL), the largest wireless operator globally on subscriber count, has also decided to opt for 4G LTE technology.

LTE offers several advantages over other 4G techniques like WiMAX, Ultra Mobile Broadband (upgrade of CDMA EV-DO) and Multi-input Multi-output (MIMO) Wireless LAN. This includes improvement in spectral efficiency, lower costs, and solid integration with other open wireless standards. These are the compelling reasons influencing the switch to LTE technology.

The growing acceptance of LTE technology has prompted the mobile handset makers to develop phones that will be compatible with this network. NTT DoCoMo will launch LTE handsets in 2011 compatible with its current 3G network, enabling the customers to access services even if they are outside an LTE coverage area.

LTE is expected to achieve download transmission speeds of 300Mbps and offers several advantages over other wireless techniques. This includes spectral efficiency, lower costs and solid integration with other open wireless standards.

Recent rumors within the broadband industry are suggestive of an expected deal between the legendary iPhone maker Apple Inc (AAPL) and Verizon Wireless to introduce a new LTE-compatible iPhone. Nokia Corp (NOK), the largest mobile phone developer in the world, has also entered in the race and is expected on launch LTE-based mobile handsets by 2011.

Qualcomm Inc. (QCOM), one of the key developers of OFDMA (Orthogonal Frequency Division Multiple Access) based chipsets has decided to introduce the trial version of LTE-compatible chipsets during the second half of 2009. LG Electronics, on the other hand, has already given a demonstration of LTE-based modem during the Mobile World Congress of 2009.
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Zacks Investment Research

AT&T’s Femtocell Coming Soon – Analyst Blog

Zacks Market Commentaries — Fri, 18 Sep 2009 16:00:54 +0000

AT&T (T), the second largest U.S. wireless carrier by subscriber base, is set to unveil nation’s first 3G femtocell product. The device (called “3G Microcell") is expected to reach select U.S. markets including Atlanta, San Antonio, Seattle and North Carolina in the next week. The company has been conducting field trials of 3G Microcell in several test markets with nationwide rollout is expected by the end of 2009.

Femtocell is a mini cell tower, which connects to the service provider’s network using broadband and is aimed at improving indoor network coverage (as much as 5,000 square feet), providing low-cost unlimited in-home voice calling plan and reducing monthly communication expenditure. Essentially, 2009 is marked as the year of femtocell as leading telecom carriers across the world are aggressively bidding to enter this emerging market.

Sprint Nextel (S) became the first carrier in the world to commercially offer femtocell with the launch of the award-winning Sprint AIRAVE in August 2008. Sprint was followed by Verizon (VZ), which launched its femtocell product in early 2009. Moreover, Vodafone (VOD) became the first carrier in Europe with the commercial launch of its femtocell product in the UK in July 2009. Spain’s Telefonica (TEF) is currently conducting trial runs through its subsidiary O2 Europe.

AT&T’s 3G Microcell is designed to improve wireless signal for both voice calls and data applications in home and small business settings and supports up to 10 3G capable cellular handsets. This is in contrast to the femtocell products of Verizon and Sprint that does not support 3G data applications and works with 2G handsets.

Moreover, Verizon’s femtocell only offers access to voice calls without any data support. As such, AT&T is expected have a competitive edge over its peers once 3G Microcell enters the U.S. market.

The new femtocell product is expected to garner attractive revenue streams through new service offerings while providing significant opportunity to reduce churn (customer switch to competitors) by means of improved service coverage. However, AT&T is yet to disclose any comprehensive pricing information for 3G Microcell.

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Zacks Investment Research

VOD Debuts UK’s SME Market – Analyst Blog

Zacks Market Commentaries — Thu, 10 Sep 2009 22:51:22 +0000

Vodafone (VOD) UK has reportedly launched a converged fixed-mobile service (called "Vodafone One Net") yesterday for small and medium enterprises (SMEs) across the UK, helping them to more effectively manage their corporate communications. This follows the company’s successful launch of Vodafone One in June 2009 that offers bundled voice, data and fixed-line services for large businesses.

Vodafone One Net, which was previously launched in Italy and Czech Republic, marks Vodafone UK’s entry in the lucrative communications market for SMEs in the UK, representing an approximate £8 billion market opportunity.

The new combined service offers a single number for mobile and landline services, one voicemail number for all messages and one contract through a single service provider. Users can seamlessly switch between landline phones and their mobiles while in a call and will have the flexibility of paying a flat call rate per subscription for all calls. Vodafone One Net thus provides businesses the privilege to concentrate more on their customers rather than spending time on managing their communications.

For businesses with multiple office locations, the company will offer effective call management through a virtual switchboard which will route the calls to different locations via the most effective channels. Vodafone UK has plans to eventually incorporate Microsoft's (MSFT) Office Communications Services (such as email and messaging) in its latest offering. Vodafone One Net will allow small and medium businesses greater cost control with up to 20% savings on the total communication bill.

Vodafone UK has also extended its collaboration with BT Group (BT) which will enable it to provide fixed-line services to the SME market in the UK as a part of the Vodafone One Net offering. Under the five year managed service agreement, BT will offer IP-enabled fixed-line voice and broadband services to Vodafone UK. This will enable Vodafone to expand its service portfolio in UK without any huge investment to build its own fixed-line network.

Vodafone has a strong presence in the enterprise wireless market in the UK. The company is the second-largest player in the UK wireless market with roughly 24.7% share. However, its presence in the enterprise fixed-line services market has been lackluster to date.

Vodafone One Net enables the company to become a full-service provider for businesses in the UK, offering integrated mobile and fixed services. This will take Vodafone UK a step ahead in its bid to lead the domestic unified communications market for SMEs.
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Zacks Investment Research

T-Mobile Warms Up to Orange – Analyst Blog

Zacks Market Commentaries — Wed, 09 Sep 2009 19:30:26 +0000

German telecom carrier Deutsche Telekom (DT) and France Telecom (FTE) are finally merging their UK operations in a 50-50 joint venture. The companies reportedly initiated negotiations yesterday and an agreement is likely to be signed by the end of October. If the deal is finalized, Deutsche Telekom’s British subsidiary T-mobile UK will combine with France Telecom’s Orange UK in a historic merger.

In the proposed deal, Deutsche Telekom will contribute T-mobile UK, including the unit’s 50% stake in the 3G wireless joint venture with Hutchison, while France Telecom will add its UK broadband Internet business along with the wireless operation. The companies are likely to retain the Orange and T-mobile brands for now to prevent customer defection. A new brand, however, is expected within two years.

The British mobile market is one of the fiercely competitive markets in Europe. Currently, Spanish telecom giant Telefonica’s (TEF) UK subsidiary O2 leads the market with approximately 27.7% share. Vodafone (VOD) and France Telecom’s Orange are the second-and third-largest operators with 24.7% and 21.5% share, respectively. T-Mobile UK is the fourth-largest operator with nearly 16.6 million subscribers and roughly 15% market share. However, the unit contends with declining profit and subscriber erosion.

The merger of T-mobile UK and Orange UK will radically change the competitive landscape in the British mobile market. The combined entity would dethrone Telefonica’s O2 UK as the largest wireless operator in the UK with roughly 37% market share and cumulative subscriber base of approximately 28.4 million.

The combined network assets will create significant cost synergies that may exceed 4 billion Euros ($5.7 billion), mostly through reduced operating and capital expenditure. The consolidated entity with greater scale, larger coverage markets and distribution network will operate and compete more efficiently while sharing the expenditure associated with future network upgrades.

In order to achieve merger synergies, the joint venture plans to invest up to 800 million Pounds ($1.3 billion) for network restructuring and streamlining operations. The merger is likely to be accretive to free cash flow and earnings from 2010 and 2011, respectively.

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Zacks Investment Research

DT to Jettison T-Mobile UK? – Analyst Blog

Zacks Market Commentaries — Fri, 04 Sep 2009 16:25:48 +0000

Deutsche Telekom (DT), the largest telecom carrier in Germany, has reportedly initiated negotiation with rival European operators to dispose its British subsidiary T-Mobile UK, which has been contending with subscriber retention problems. The company has began preliminary discussions with its peers Vodafone (VOD), France Telecom (FTE) and Telefonica (TEF), who have expressed interest to buy the struggling entity with a long history of under-performance.

The UK wireless market represents one of the most intensely competitive markets in Europe, with five major operators currently battling for market share and customer retention. UK exited 2008 with nearly 76 million cell phone subscribers and 124% mobile penetration. Currently, O2 UK, which is owned by the Spanish telecom giant Telefonica, leads the market with approximately 27.7% share. Vodafone (24.7%) and France Telecom’s Orange (21.5%) remain the second and third largest operators, respectively.

T-Mobile UK is the fourth largest operator in the British mobile market, with approximately 16.6 million subscribers and 14.9% market share. However, the company continues to experience decelerated revenue per user and profit margins due to aggressive price competition and regulatory pressure.

Reported revenue at T-Mobile UK declined 13% year over year in the last quarter due to unfavorable regulatory measures and competition. Additionally, the entity is also struggling with customer retention issues, reflected by year over year increase in churn (customer switch to competitors).

The potential divestiture of T-Mobile UK may fetch €4 billion (US$5.7 billion) to Deutsche Telekom. Funds raised through this transaction will help the company to further strengthen its growing US wireless business. The deal, if eventually materializes (not likely before October 2009), will radically change the competitive scenario in the British mobile market. The eventual buyer of T-Mobile UK will be well positioned to capture the largest share of this market.
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Zacks Investment Research

Zacks Analyst Blog Highlights: PetroChina Company Ltd., Sinopec, Total SA, CNOOC Ltd. and Vodafone – Press Releases

Zacks Market Commentaries — Wed, 02 Sep 2009 13:55:59 +0000

For Immediate Release

Chicago, IL – September 2, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: PetroChina Company Ltd. (PTR), Sinopec (SNP), Total SA (TOT), CNOOC Ltd. (CEO) and Vodafone (VOD).

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Here are highlights from Tuesday’s Analyst Blog:

PetroChina Sings 'O Canada'

Yesterday, PetroChina Company Ltd. (PTR), the largest integrated oil company in China, agreed to pay C$1.9 billion ($1.7 billion) to acquire a majority stake in two oil sands projects in western Canada.

As per the terms of the agreement with Athabasca Oil Sands Corp. (a privately held Calgary-based group), the Chinese energy giant will purchase a 60% working interest in the Canadian company’s proposed MacKay River and the Dover ventures in northern Alberta. The deal, which awaits certain regulatory approvals, is currently the largest venture by China in Canadian oil sands.

According to an independent third party evaluation, the oil sands that PetroChina plans to exploit are estimated to contain as many as five billion barrels of reserves, about half of Athabasca’s total recoverable resources. Peak production from the two sites is projected to reach 300,000 – 500,000 barrels per day, with first volumes expected in 2014.

The agreement calls for the Chinese behemoth to provide certain financing arrangements for Athabasca, ensuring timely development of the MacKay River and Dover projects. In general, oil sands projects are characterized by long-term capital-intensive investments that require huge up-front expenditures. The total capital cost to develop the MacKay River and the Dover properties are estimated to be in the range of C$15 – C$20 billion.

Oil sands, also known as tar sands, are naturally occurring mixtures of bitumen (a sticky, tar-like form of petroleum), water and sand that are found in large deposits in Athabasca, Peace River, and Cold Lake in Canada 's Alberta province. The oil sands in northern Alberta hold the largest crude reserves outside the Middle East.

We see this transaction as part of PetroChina’s long-term strategic plan to explore one of the world's largest untapped oil regions and supplement its conventional reserves.

In recent times, oil sands have drawn growing interest from Chinese energy groups. Sinopec (SNP) owns a 10% stake in a planned Total SA (TOT) project, while CNOOC Ltd. (CEO) bought a 17% interest in a small privately held oil sands project.

Vodafone Accelerates 3G

Vodafone (VOD) reportedly upgraded its 3G mobile broadband network to offer maximum theoretical download speed of 14.4 megabits per second (Mbps). However, users will get a practical download speed of up to 10.8 Mbps. The upgraded service will be initially available to the customers across London, Birmingham and Liverpool and extended to the rest of UK in due course

The world’s largest revenue-generating wireless carrier launched its 3G services in 13 countries in fiscal 2008. Vodafone’s 3G wireless broadband technology is based on High-Speed Downlink Packet Access (HSDPA) and provides peak data rates of up to 7.2 Mbps. It spent over £14 billion ($28 billion) to obtain 3G wireless licenses in various countries, devoting nearly 40% of capital expenditure to expand its 3G network.

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Vodafone Accelerates 3G – Analyst Blog

Zacks Market Commentaries — Tue, 01 Sep 2009 18:55:45 +0000

Vodafone continues to outpace major rivals such as Deutsche Telekom’s (DT) T-Mobile, France Telecom’s (FTE) Orange and Telefonica’s (TEF) O2 in the advancement of next-generation cellular deployments. The company is now the first and only operator in the UK to offer theoretical peak download speed of 14.4 Mbps. This compares to the average top speeds of 4.5 Mbps offered by T-Mobile and 3.6 Mbps offered by O2 and Orange. However, O2 and Orange are in the process of upgrading their networks to offer throughput up to 7.2 Mbps.

Vodafone is also upgrading its existing HSDPA based network to the HSPA+ (High Speed Packet Access) 3G mobile broadband standard to offer a throughput of up to 42 Mbps coupled with more efficient data transport management. As a part of this effort, the company has successfully tested an HSPA+ mobile broadband service in Spain with peak downlink speed of up to 20 Mbps, representing one of the fastest 3G data connection speeds available today.

Increased penetration of 3G services remains the primary driver of data revenue growth in Vodafone’s European segment, which grew 37% year over year in fiscal 2009. This was backed by increased adoption of 3G devices (especially iPhone and BlackBerry Storm) and associated data services.

Ongoing efforts to upgrade the existing network infrastructure should result in higher ARPU (average revenue per user), higher minutes of use and improved operating margins through greater network efficiency. Moreover, it is expected to limit customer churn through sustained product differentiation. This represents an encouraging prospect as Vodafone deals with the challenges of stabilizing subscriber count in the highly mature, core European markets.

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Zacks Investment Research

DT Entering Indian Internet Space – Analyst Blog

Zacks Market Commentaries — Thu, 27 Aug 2009 17:30:12 +0000

Deutsche Telekom (DT), the largest telecom carrier in Germany, is entering the Indian Internet market in the near future. The European telecom giant recently acquired 17% stake in the Indian telecom operator Devas Multimedia for approximately $75 million. In collaboration with Devas, Deutsche Telekom will offer high capacity radio network based Internet services in the metropolitan areas of India starting from 2010.

The company's expansion initiative into the lucrative Indian telecom market is the result of limited growth opportunity in the mature core European and U.S. markets. Deutsche Telekom's focus recently shifted to the under-penetrated emerging economies in Asia and Africa given the significant
potential for growth in these nascent markets.

Deutsche Telekom continues to face a weak economy with further erosion in German fixed-line telephony business due to intense competition. The company is trying to offset declining fixed-line revenue with growth across broadband Internet and wireless.

The Indian telecom market is among the fastest-growing in the world. The country harbors the second largest wireless subscriber base, which currently exceeds 400 million and is expected to reach 450 million at the end of 2009.

While growth in wireless remains encouraging, high-speed Internet penetration in India continues to be one of the lowest in the world. Current adoption rate in urban areas is as low as 3%. This is mainly attributable to poor network infrastructure, limitation of wireline Internet, slow service deployments and low PC adoption.

Although the low market penetration in India offers significant opportunity to Deutsche Telekom, the company will face intense competition from the local Internet service providers. Currently, the Indian Internet market is crowded with a number of incumbent operators with the most prominent players being Reliance Communications, Tata Indicom, BSNL, MTNL and Bharti Airtel. Apart from these local operators, leading international carriers such as Vodafone (VOD) and France Telecom (FTE) are gearing up for their respective service launches.

Deutsche Telekom is expected to be challenged in promoting its premium service brands in the Indian Internet market given the presence of competitive low-cost popular brands of the local service providers. However, the company's higher bandwidth network is expected to provide it a fair advantage over competition.

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Zacks Investment Research

Zacks Analyst Blog Highlights: AT&T Inc., NTT DoCoMo, Vodafone, Telefonica and SK Telecom – Press Releases

Zacks Market Commentaries — Tue, 04 Aug 2009 13:30:18 +0000

For Immediate Release

Chicago, IL – August 4, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: AT&T Inc. (T), NTT DoCoMo (DCM), Vodafone (VOD), Telefonica (TEF) and SK Telecom (SKM).

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Here are highlights from Monday’s Analyst Blog:

AT&T Leads Global HSPA Market

AT&T Inc. (T) has reportedly emerged as the leading player in the global HSPA (high-speed packet access) market in terms of total subscriber connections. According to a recent report by the GSM Association, the second-largest US carrier has outpaced industry leaders such as NTT DoCoMo (DCM), Vodafone (VOD), Telefonica (TEF) and SK Telecom (SKM) in terms of HSPA penetration.

HSPA is a mobile telephony standard widely used in 3G wireless networks to boost end-user experience by offering peak download speed of up to 14 megabits per second. According to the industry estimate, the global HSPA customer base is approaching the 150 million mark with around 230 operators having already deployed HSPA services and amassed 131 million subscribers (based on recent statistics).

AT&T currently has 28.6 million HSPA customer connections, which equates to 21% share of the worldwide HSPA subscription. This is significantly higher, compared to SK Telecom’s customer base of 12.4 million, NTT DoCoMo’s 5.1 million, Telefonica O2’s 2.3 million and Vodafone UK’s 2.1 million.

Since launching its wireless services on HSPA in 2005, AT&T has been able to outpace its Asian and European peers in terms of market penetration. Currently, almost 100% of the company’s 3G customers are on the HSPA platform. This is compared to the other major players in the HSPA market such as NTT DoCoMo, which currently has most of its 3G customers on the W-CDMA platform, a 3G wireless technology having slower network speeds than HSPA.

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Zacks Investment Research

Zacks Analyst Blog Highlights: Telefonica, Vodafone, Deutsche Telecom, Palm, Inc. and China Unicom – Press Releases

Zacks Market Commentaries — Fri, 31 Jul 2009 13:15:06 +0000

For Immediate Release

Chicago, IL – July 31, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Telefonica (TEF), Vodafone (VOD), Deutsche Telecom (DT), Palm, Inc. (PALM) and China Unicom (CHU).

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Here are highlights from Thursday’s Analyst Blog:

Telefonica Outpaces Forecast

Telefonica (TEF) continues to experience declines across its domestic and European markets due to recession and intense competition which offset growth in Latin America. The company’s Spanish revenue declined 6.9% to €4.8 billion ($6.6 billion) in the second quarter while revenue from Europe decreased by 5.9% to €3.3 billion ($4.5 billion) partly due to negative currency exchange rate movements.

The company’s UK wireless operation (O2 UK) continues to struggle, with declining revenues as the operator contends with a weak economic condition and intense competition, especially from Vodafone (VOD) and Deutsche Telecom (DT).

Telefonica is currently benefiting from strong demand for iPhones, which has strengthened its cellular revenue base. Moreover, the company has recently received the right to market Palm, Inc.’s (PALM) Pre smartphone in the UK, Spain, Ireland and Germany. The company is also aggressively pursuing expansion initiatives into other emerging markets as the company aims to increase its foothold in China through a stake holding in China Unicom (CHU).

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Zacks Investment Research

Telefonica Outpaces Forecast – Analyst Blog

Zacks Market Commentaries — Thu, 30 Jul 2009 15:38:35 +0000

Telefonica (TEF) reported its second quarter 2009 results today with net income of €1.93 billion ($2.6 billion), down 6.1% year over year while exceeding market consensus. The Spanish telecom giant reported earnings per share of €0.42 ($1.73) for the quarter, beating the Zacks consensus estimate of $1.62.

The company reported second quarter revenue of €13.9 billion ($18.9 billion), down 2.6% year over year, which was below Zacks' expectation. Revenue and profitability for the quarter was impacted by weak contributions from European markets due to deteriorating economic conditions.

Latin America contributed 40% of the group revenues followed by Spain with 35% and Europe with 24%. Operating income declined 2.8% year over year to €5.6 billion ($7.6 billion).

At the end of the June quarter, total customer access points reached approximately 264 million, up 7.6% year over year, with a net addition of 2.6 million. Subscriber accretion was driven by healthy growth in wireless, broadband and Pay TV services.

Total retail broadband access grew 14.1% year over year to 13.1 million, boosted by rapid adoption of bundled services (dual or triple play service packages). Total wireless access exceeded 200 million with 2.7 million net additions during the second quarter, driven by contributions from Brazil, Germany, Mexico and the UK. Pay TV access reached 2.4 million customers, increasing 19.4% year over year.

Telefonica continues to experience declines across its domestic and European markets due to recession and intense competition which offset growth in Latin America. The company’s Spanish revenue declined 6.9% to €4.8 billion ($6.6 billion) in the second quarter while revenue from Europe decreased by 5.9% to €3.3 billion ($4.5 billion) partly due to negative currency exchange rate movements.

The company’s UK wireless operation (O2 UK) continues to struggle, with declining revenues as the operator contends with a weak economic condition and intense competition, especially from Vodafone (VOD) and Deutsche Telecom (DT).

With approximately 8% growth through 2010, Latin America remains the principal growth region for Telefonica. Revenue in this segment grew 3.6% year over year to €5.6 billion ($7.6 billion) while total customer access lines reached 160.8 million, up 8.7% year over year, with net additions of 1.3 million. The company continues to lead the Brazilian wireless market, with its customer base at Vivo reaching 46.8 million (up 15.8%) corresponding to approximately 30% market share.

Telefonica has reaffirmed its financial guidance for 2009 as it expects continued increases in consolidated revenues with annual OIBDA growth projected in the range of 1 - 3%. Annual operating cash flow growth is expected in the range of 8 - 11%. Capital expenditure for 2009 is projected below €7.5 billion ($10.2 billion), lower than 2008 level as the company is increasingly focused on reducing spending to improve cash flow generation.

The company remains committed to offer attractive returns to investors with an annual dividend of €1.15 per share earmarked for 2009, representing a 15% year over year increase. Additionally, expansion of its 3G wireless business also remains on track, with service deployments in additional Latin American markets such as Mexico and Venezuela after completing initial roll-outs in Brazil.

Telefonica is currently benefiting from strong demand for iPhones, which has strengthened its cellular revenue base. Moreover, the company has recently received the right to market Palm, Inc.’s (PALM) Pre smartphone in the UK, Spain, Ireland and Germany. The company is also aggressively pursuing expansion initiatives into other emerging markets as the company aims to increase its foothold in China through a stake holding in China Unicom (CHU).

The company’s dominant position in the Spanish telecom market, attractive growth prospects in Latin America and respectable dividend payout remain positive factors for investment considerations. However, we remain cautious with regard to Telefonica’s declining wireline business, aggressive acquisition strategy and highly leveraged balance sheet. Additionally, reduced tariff rates imposed by Spanish and European regulators are tightening wireless revenue per user.

Moreover, operating results for the remainder of 2009 are expected to be impeded by economic deceleration in key markets and depreciation of major Latin American currencies against the U.S. dollar and Euro. Consequently, we maintain our Hold rating on Telefonica.
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Zacks Investment Research

VOD Buoyed By FX Swing – Analyst Blog

Zacks Market Commentaries — Fri, 24 Jul 2009 14:15:02 +0000

Vodafone Group Plc (VOD), the largest wireless carrier in the world by revenue, has announced financial results for the first quarter of fiscal year 2010 (ended June 30, 2009). The company reported group revenues of £10.7 billion (US$16.6 billion), representing a 9.3% year over year growth. Favorable exchange rate (euro-sterling) movements and net impact of merger and acquisition initiatives (especially additional 15% stake in Vodacom) contributed to this growth. Excluding these impact (organic basis), revenue declined by 2.4%.

Geographically, revenues for the European segment increased 3.8% (down 4.8% on organic basis) to £7.5 billion (US$11.6 billion) in the first quarter. Africa & Central Europe segment posted revenues of £1.7 billion (US$2.6 billion), up 27.8% year over year. Organically, revenue fell 2.5% as consistent growth at Vodacom (South Africa) and favorable exchange rate movements were partly offset by weak contributions from Romania and Turkey. Asia Pacific & Middle East segment continues to perform in line with expectation with revenue surging 20.3% (13.7% organically) to £1.6 billion (US$2.5 billion), favored by strong growth momentum in India.

Group service revenue declined 2.1% on an organic basis to £10.1 billion (US$15.6 billion), primarily due to weaker contributions from European markets as recessionary conditions curbed demand for wireless services. Service revenue in Europe declined 4.4% organically as growth in Italy was more than offset by decreases across Spain, Germany and U.K due to a weaker economy, regulatory pressure and intense competition.

In the first quarter, Vodafone registered 8 million new mobile connections across its operations, bringing the total subscriber base to 315.3 million (83% represented by prepaid). India continues to be a key driver for subscriber growth with a net addition of 7.7 million customers followed by Egypt (1.4 million) and South Africa (1.3 million). In Europe, the company lost 633,000 subscribers in the quarter. Verizon Wireless posted a net addition of 1.1 million customers.

Management has confirmed its outlook for fiscal 2010 with adjusted operating profit projected in the range of £11.0 billion to £11.8 billion (US$16.5 billion to US$17.7 billion), assuming a favorable foreign exchange environment. Free cash flow is projected between £6.0 billion and £6.5 billion (US$9 billion to US$9.7 billion).

Vodafone is aggressively pursuing its cost reduction program (including a workforce reduction in Europe) which could generate annual savings of £1 billion (US$1.6 billion) by 2011, with 65% of the savings expected to be realized in fiscal 2010. Also, the company continues to accelerate 3G wireless service deployments and expanding network availability across Asia, Eastern Europe and Africa, primarily through acquisitions. Additionally, Vodafone is focused on improving shareholder returns through attractive dividend payouts.

While we consider the limitations of economic improvements in key European markets over the near-term, we believe Vodafone’s financial prospects remain attractive relative to many other large-cap telecom carriers. Additionally, management’s outlook for fiscal 2010 appears favorable with opportunity for sustainable growth across the incipient markets.

That said, we maintain our Buy rating for Vodafone.
Read the full analyst report on "VOD"
Zacks Investment Research

Vodafone strengthens broadband presence in Ireland – Analyst Blog

Zacks Market Commentaries — Wed, 22 Jul 2009 16:45:00 +0000

Vodafone (<a href="http://(VOD)">VOD), the largest revenue generating international wireless carrier, has reportedly entered an agreement with BT Group (<a href="http://(BT)">BT), to develop and upgrade broadband infrastructure and build advance networks in the Republic of Ireland. This represents the latest deal in the long-term strategic alliance between the two companies.

Under the seven-year deal, which is subjected to approvals by the Irish regulators, BT will transfer its consumer and small business broadband and voice customer base and will provide access to its fixed-line network to Vodafone. The aggregate value of the business to be transferred by BT is approximately €4.8 billion ($6.8 billion), covering roughly 84,000 residential customers and 3,000 small business clients.

Currently, Vodafone has 4.6 million fixed broadband subscribers across Europe with Germany being the most significant with 3.1 million customers. With the acquisition of Perlico (a leading fixed-line carrier in Ireland) in November 2007, the company became one of the leading players in the Irish fixed-line broadband market currently serving around 83,000 customers. Moreover, Vodafone is the largest wireless operator in Ireland with over 2 million subscribers.

Eircom Group is currently the largest player in the Irish fixed broadband market with roughly 38% market share. Successful consummation of the agreement with BT will further consolidate Vodafone’s position as the number-two player in this market with approximately 15% market share and more than 170,000 customers.

The agreement with BT also enables Vodafone to launch an array of converged (fixed-mobile) communication services which may include the IPTV (Internet Protocol TV) service. Vodafone will leverage BT’s broadband network infrastructure to roll out these services. BT will provide a broadband network platform with data speeds reaching up to 24 megabits per second (Mbps), covering approximately two-third of Ireland’s available broadband lines. Given this bullish prospect, we reiterate our Buy recommendation for Vodafone.
Read the full analyst report on "VOD"
Read the full analyst report on "BT"
Zacks Investment Research

Vodafone Leads Greek Broadband – Analyst Blog

Zacks Market Commentaries — Tue, 14 Jul 2009 16:33:25 +0000

Vodafone (VOD), the world’s largest revenue-generating wireless carrier, has reportedly launched the most advanced wireless high-speed Internet service in Greece based on the new HSPA+ (High Speed Packet Access) mobile broadband technology.

The newly launched service which is also one of the first of its kind in Europe, will offer theoretical peak download speed of 21.6 megabit per second (Mbps), a significant improvement from the present download speeds of 14.4 Mbps offered by Vodafone in Greece.

The company will initially offer this advancement in the selected areas of Athens and extend the service in other areas in due course. The company recently completed commercial rollout of HSPA+ based mobile broadband service in Portugal as the first operator in that country to offer maximum download speed of 21.6 Mbps.

HSPA+, also called HSPA Evolution, represents a major advancement in 3G-based wireless broadband technologies, aimed at improving customer experience by significantly boosting network speed. Vodafone is currently leading the way in developing services based on this technology. The company is aggressively upgrading its existing 3G network to HSPA+ in order to offer more efficient data transport management with a potential for boosting download speed to 42 Mbps.

Vodafone continues to leapfrog its two major rivals Deutsche Telekom’s (DT) T-Mobile and Telefonica’s (TEF) O2 in the European mobile broadband market in terms of technology advancements. The company is the first and only operator in Europe to offer theoretical peak download speeds of 14.4 Mbps and 21.6 Mbps which are compared to the average top speed of 7.2 Mbps currently offered by both T-Mobile and O2.

Ongoing efforts to upgrade the existing network infrastructure should result in higher average revenue per user (ARPU), higher minute usage and improved operating margins through greater network efficiency. Given this prospect, we maintain our Buy recommendation for Vodafone.

Read the full analyst report on "VOD"
Read the full analyst report on "DT"
Read the full analyst report on "TEF"
Zacks Investment Research

China Mobile: The Foreign Giant

Bullish Bankers — Mon, 13 Jul 2009 03:06:46 +0000

When most investors think of the telecom sector and wireless providers, Verizon [VZ: 28.62, -0.02 (-0.07%)] and AT&T [T: 23.44, +0.06 (+0.26%)] come to mind first. These two companies form a duopoly of the domestic market. Market penetration is nearing 90% in the US, so growth is limited, as these two companies are forced to [...]

Telecom Italia’s Domestic Deal – Analyst Blog

Zacks Market Commentaries — Wed, 08 Jul 2009 20:40:58 +0000

Telecom Italia (TI), the incumbent telecom operator in Italy, has reportedly collaborated with fellow Italian carrier 3 Italia to share access sites for radio mobile network. Under the three-year deal, the two companies will share both existing and future access sites covering no less than 2,000 sites in aggregate. Additionally, each operator will host the radio mobile station of its partner with an aim to enhance network coverage in the country.

Through its subsidiary Telecom Italia Mobile, Telecom Italia is the leading supplier of wireless services in Italy with 34.2 million subscribers. The company also has more than 36.1 million international wireless customers, with a major presence in Latin America (especially Brazil). However, subscriber growth has decelerated in the most recent quarter and the company is gradually losing market share to its rivals, including Vodafone (VOD).

Wireless operators across the globe are increasingly converging on network sharing that offers meaningful operating and cost-saving synergies. Telecom Italia is currently focusing on aggressive cost cutting to offset pressure on its topline, primarily due to lower revenue from its European broadband and domestic mobile business segments. The company is rationalizing and streamlining its organizational infrastructure and networks, a move that is expected to yield approximately €1.2 billion ($1.9 billion) in cost savings though 2010.

The network sharing deal with 3 Italia will benefit Telecom Italia on several fronts. In addition to improving network efficiency in both urban and rural regions, the agreement will truncate network costs by 30% (especially site leasing expenses) for each operator and reduce time for future network infrastructure developments.

We maintain our Hold recommendation for Telecom Italia as we envision that operating results through 2009 will be restricted by its exposure to a highly saturated domestic market, recessionary conditions, regulatory pressure on wireless business and increased competition across overseas markets.

Read the full analyst report on "TI"
Zacks Investment Research

Zacks Analyst Blog Highlights: Telefonica, Palm Inc, Apple Inc, Sprint Nextel and Vodafone – Press Releases

Zacks Market Commentaries — Wed, 08 Jul 2009 13:16:27 +0000

For Immediate Release

Chicago, IL – July 8, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Telefonica (TEF), Palm Inc (PALM), Apple Inc (AAPL), Sprint Nextel (S) and Vodafone (VOD).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday’s Analyst Blog:

Telefonica Wins Palm Pre

On July 7, 2009, top Spanish telecom operator Telefonica (TEF) announced that it has been awarded the exclusive right to distribute Palm Inc’s (PALM) recently released smartphone “Pre" in the selected European markets.

The company’s wireless arms O2 and Movistar will exclusively sell the premium handset when it becomes available in specified European countries during the holiday season in December 2009. O2 has received the right to market Pre in the UK, Ireland and Germany, while Movistar will have exclusivity in Spain.

Like Apple Inc’s (AAPL) iPhone 3G (and the latest 3GS version), Palm Pre is equipped with the most advanced cellular technology and embedded features available in the 3G handheld market today. The high profile handset was launched in the U.S. on June 6, 2009 with Sprint Nextel (S) being the exclusive dealer. Palm Pre has generated strong market response, having sold 90,000 to 100,000 units in the first week of the launch.

Telefonica’s Spanish and European wireless operations are currently struggling with declining revenues and lower subscriber growth levels reported in the most recent quarter as weak economic conditions across these key markets are affecting customer usage levels supported by intense competition. Additionally, reduced tariff rates imposed by Spanish and European regulations are tightening wireless revenue per user.

Palm Pre represents the second most significant handset deal for both O2 and Movistar as they are already the exclusive distributors of iPhones (including 3GS) in Britain and Spain, respectively. The ability to market two of the most sought after handset brands will strengthen O2’s competitive position over its biggest rival Vodafone (VOD).

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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Zacks Investment Research

Telefonica Wins Palm Pre – Analyst Blog

Zacks Market Commentaries — Tue, 07 Jul 2009 17:08:24 +0000

Telefonica’s O2 and Movistar clinch Palm Pre deal

On July 7, 2009, top Spanish telecom operator Telefonica (TEF) announced that it has been awarded the exclusive right to distribute Palm Inc’s (PALM) recently released smartphone “Pre" in the selected European markets.

The company’s wireless arms O2 and Movistar will exclusively sell the premium handset when it becomes available in specified European countries during the holiday season in December 2009. O2 has received the right to market Pre in the UK, Ireland and Germany, while Movistar will have exclusivity in Spain.

Like Apple Inc’s (AAPL) iPhone 3G (and the latest 3GS version), Palm Pre is equipped with the most advanced cellular technology and embedded features available in the 3G handheld market today. The high profile handset was launched in the U.S. on June 6, 2009 with Sprint Nextel (S) being the exclusive dealer. Palm Pre has generated strong market response, having sold 90,000 to 100,000 units in the first week of the launch.

Telefonica’s Spanish and European wireless operations are currently struggling with declining revenues and lower subscriber growth levels reported in the most recent quarter as weak economic conditions across these key markets are affecting customer usage levels supported by intense competition. Additionally, reduced tariff rates imposed by Spanish and European regulations are tightening wireless revenue per user.

Palm Pre represents the second most significant handset deal for both O2 and Movistar as they are already the exclusive distributors of iPhones (including 3GS) in Britain and Spain, respectively. The ability to market two of the most sought after handset brands will strengthen O2’s competitive position over its biggest rival Vodafone (VOD), which sells Research In Motion's (RIMM) BlackBerry series of smartphones in Europe, a head-to-head competitor to Palm Pre.

We reaffirm our Hold recommendation for Telefonica as we continue to assess revenue and subscriber retention trends across its domestic and European operations, strongly challenged by the weakening local economies.
Read the full analyst report on "TEF"
Read the full analyst report on "PALM"
Read the full analyst report on "AAPL"
Read the full analyst report on "VOD"
Read the full analyst report on "RIMM"
Read the full analyst report on "S"
Zacks Investment Research

LTE Leads in 4G Technology Race – Analyst Blog

Zacks Market Commentaries — Wed, 01 Jul 2009 18:26:06 +0000

Long Term Evolution (LTE) technology is ahead in the race as the most sought after next-generation (4G) wireless network standard in the market. The 4G wireless networks are aiming to cope with substantial demand for high-speed wireless data services and mobile video. LTE is an IP-based modulation standard and a set of enhancement for the existing Universal Mobile Telecommunications System (UMTS). This technology has been pioneered by the 3rd Generation Partnership Project (3GPP), a telecom industry body comprising wireless carriers and equipment vendors who have been buying and selling the same proprietary products for years.

Verizon Communication (VZ), the largest carrier in the U.S., and NTT DoCoMo (DCM), the largest carrier in Japan, are the first two companies to decide on implementing LTE-based networks by 2010. Vodafone (VOD), the largest mobile carrier globally on revenue count, and AT&T (T) will implement LTE by 2012. Recently, China Mobile (CHL), the largest wireless operator globally on subscriber count, has also decided to opt for 4G LTE technology.

LTE offers several advantages over other 4G techniques like WiMAX, Ultra Mobile Broadband (upgrade of CDMA EV-DO) and Multi-input Multi-output (MIMO) Wireless LAN. This includes improvement in spectral efficiency, lower costs, and solid integration with other open wireless standards. These are the compelling reasons influencing the switch to LTE technology.

LTE provides downlink and uplink peak rates of 100 Mbit/s and 50 Mbit/s respectively, with RAN (radio access network) round-trip times of less than 10ms. LTE also supports flexible carrier bandwidth and both FDD (frequency division duplexing) and TDD (time division duplexing) on the same platform. Ability to incrementally increase speed and capacity are the major hallmarks for its acceptability to wireless carriers. Therefore, LTE gear makers like L.M. Ericsson (ERIC), Alcatel-Lucent (ALU), Nokia-Siemens and Huawei Technologies Ltd look to gain substantially from this state-of-the-art technology.

We reiterate Buy for Vodafone, NTT DoCoMo, and China Mobile while continuing to maintain Hold for Verizon, AT&T, L.M. Ericsson and Alcatel-Lucent.

Read the full analyst report on "VZ"
Read the full analyst report on "DCM"
Read the full analyst report on "VOD"
Read the full analyst report on "T"
Read the full analyst report on "CHL"
Read the full analyst report on "ERIC"
Read the full analyst report on "ALU"
Zacks Investment Research

China Mobile Explores 4G Option – Analyst Blog

Zacks Market Commentaries — Mon, 29 Jun 2009 19:26:08 +0000

China Mobile (CHL) has reportedly accelerated the development process of its 4G (next generation) mobile broadband network. The world's largest carrier has already completed the first phase of trials and is set to commence the second phase in late July or early August 2009.

A successful completion of the second-phase trials (expected by the end of 2009) will pave the way for launching field tests in early 2010. China Mobile has partnered with Vodafone (VOD) and Verizon Wireless (VZ) for the TD-LTE venture and has selected Ericsson (ERIC), Alcatel-Lucent (ALU), Nokia Siemens, Huawei Technologies and ZTE Corp as the primary technology vendors. The company plans to devote approximately 60% of its capital expenditure over the next few years to develop its 4G network.

China Mobile recently accelerated its development plan for TD-LTE due to uncertainties regarding the success of its 3G services based on TD-SCDMA. The company faces challenges regarding the adaptability and performance of this indigenously developed 3G standard.

This is due to the fact that other European and American based 3G standards such as WCDMA and CDMA2000, which are licensed to China Unicom (CHU) and China Telecom (CHA) respectively, offer faster network speeds and already have wide acceptability in the marketplace. For example, the CDMA 2000 based 3G network of China Telecom is 50% faster than China Mobile's TD-SCDMA network. Additionally, TD-SCDMA also suffers from certain limitations when it comes to international roaming.

Leading carriers across the world have adopted LTE as the base technology standard for 4G network upgrade initiatives due to its fast data transfer capability. LTE offers rapid downlink and uplink speeds of 100 megabits per second and 50 megabits per second, respectively, which is competitive or faster than other leading 4G standards including WiMax.

China Mobile aims to leverage the 4G TD-LTE opportunity to offset limitations of the TD-SCDMA based 3G services, which may restrict its wider market adoption. Moreover, this move will also provide an opportunity to leapfrog over its Chinese peers to emerge as the first carrier to deploy 4G LTE-based mobile broadband network in China, representing a significant competitive advantage. That said, we maintain our Buy rating on China Mobile.

Read the full analyst report on "CHL"
Read the full analyst report on "ERIC"
Read the full analyst report on "VOD"
Read the full analyst report on "ALU"
Read the full analyst report on "VZ"
Read the full analyst report on "CHU"
Read the full analyst report on "CHA"
Zacks Investment Research

India to Auction 3G Licenses – Analyst Blog

Zacks Market Commentaries — Fri, 26 Jun 2009 22:14:59 +0000

Indian wireless market heats up with 3G spectrum auction at the doorstep

The Indian government is expected to auction third-generation (3G) wireless licenses as early as mid-August 2009. The country's telecommunication department is planning to issue six 3G licenses nationwide to privately held service providers. The government has set a bidding price of INR 40.4 billion (US$834 million) per operator, which may yield more than INR 242 billion (US$5 billion) from the spectrum sale.

Currently, 3G licenses are only allocated to State-owned mobile operators Baharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MNTL) who have already launched their respectively 3G services in the selected markets in early 2009. However, these operators are only able to amass modest users until that date.

The impending spectrum auction, which was initially scheduled to take place at the end of 2008, was delayed due to disputes between the government and the regulator regarding the spectrum pricing structure. The telecommunication department finally decided to double the bidding price initially set in August 2008 in order to expedite the 3G license auction process.

Apart from the Indian telecom companies, the government is allowing new market entrants and overseas telecom operators to participate in the auction, a move which will intensify competition in the Indian mobile market.

India is the second largest wireless market in the world (after China) with over 410 million cellular subscribers at the end of May 2009, representing 36% penetration. Despite of the economic headwinds, the country's mobile subscriber base continues to grow at a healthy pace with approximately 112 million customers were added in 2008, up 36% year-over-year.

Availability of cheap mobile handsets, low call costs and expansion of network coverage have largely contributed to this growth. Bharti Airtel is the incumbent mobile operator with just over 24% market share followed by Reliance Communications (19%) and Vodafone Essar (18%).

The upcoming spectrum auction will further boost mobile-phone demand in India, driven by wider access to advanced data applications enabled by the 3G technology. Additionally, this will also foster sizable investment in the telecom sector for commercial deployment of 3G services across the country.

Moreover, nationwide 3G deployment will also expected to cement the wide gap between urban and rural regions in terms of mobile penetration.
Read the full analyst report on "BSNL"
Read the full analyst report on "MNTL"
Zacks Investment Research

Vodafone Leads European Femtocell – Analyst Blog

Zacks Market Commentaries — Fri, 26 Jun 2009 18:02:19 +0000

Vodafone (VOD), the largest revenue-generating international wireless carrier, recently announced its plan to offer femtocell service in the U.K. as early as on July 1, 2009.

This will make the London-based telecom operator the first carrier in Europe to commercially launch a femtocell product, leapfrogging its main rival Telefonica (TEF) which is presently conducting trial runs through its subsidiary O2 Europe.

Femtocell is a mini cell tower which connects to the service provider's network using broadband, and is aimed at improving indoor 3G coverage while reducing monthly communication expenditures. Essentially, 2009 will be marked as the year of femtocell, as leading telecom carriers across the world are aggressively bidding to enter this emerging market.

So far, availability of a femtocell product has been restricted to the U.S. with Sprint Nextel (S) and Verizon (VZ) have already launched their respective femtocell products. Moreover, AT&T (T) is gearing up for the nationwide commercial launch of the first 3G femtocell product, tentatively by the end of 2009.

Vodafone's femtocell product, christened the "Vodafone Access Gateway," will be built by Alcatel Lucent (ALU) and will support all 3G capable handsets. Additionally, it is designed to boost indoor call reception, supporting up to four voice calls at a time.

Driven by these capabilities, the femtocell product is expected to foster greater use of Vodafone services in the home setting through extended mobile usage. Moreover, this may also provide significant opportunity to reduce churn (customer switch to competitors) levels by means of improved service coverage.

However, the pricing structure of the femtocell product is bit complicated (without any clear product specific tariffs), which may serve as a limiting factor for its commercial uptake. That said, we maintain our Buy recommendation for Vodafone.

Read the full analyst report on "VOD"
Read the full analyst report on "TEF"
Read the full analyst report on "S"
Read the full analyst report on "VZ"
Read the full analyst report on "T"
Read the full analyst report on "ALU"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Vodafone, Somaxon, McDonald’s Corporation, Starbucks and Yum! Brands Inc. – Press Releases

Zacks Market Commentaries — Tue, 09 Jun 2009 13:37:31 +0000

For Immediate Release

Chicago, IL - June 9, 2009 - Zacks Equity Research highlights Vodafone (VOD) as the Bull of the Day and Somaxon (SOMX) the Bear of the Day. In addition, Zacks Equity Research provides analysis on McDonald's Corporation (MCD), Starbucks (SBUX) and Yum! Brands Inc (YUM).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

We maintain our Buy recommendation for Vodafone (VOD), the largest revenue-generating international wireless carrier. Operating results for fiscal 2009 were highlighted by respectable increases in subscriber count bolstered by record net additions for its Indian operation.

Vodafone continues to accelerate 3G wireless service deployments and expanding network availability across Asia, Eastern Europe and Africa, primarily through acquisitions. Additionally, the company is focused on improving shareholder returns through increased dividend payouts, which supports our valuation forecasts.

Management's outlook for fiscal 2010 appears favorable as operating results are expected to improve with continued growth across incipient markets coupled with ongoing cost saving initiatives and currency exchange translation gains.

Bear of the Day:

On June 4, 2009, Somaxon (SOMX) announced that is has resubmitted the new drug application (NDA) to the U.S. FDA for Silenor (doxepin) for the treatment of insomnia. Despite this good news, we struggle to see how this drug can capture enough of the insomnia market to drive Somaxon to strong profitability.

The insomnia market is dominated by generic molecules, and without an onset claim, Silenor will already lose out on approximately half the market. Plus, Somaxon is running dangerously low on cash. We estimate the current cash balance is only enough to fund operations until July 2009.

Therefore, we expect a highly dilutive (30-40%) capital raise in the next week or two. We have a Sell rating on the shares and a target price of $0.50.

Latest Posts on the Zacks Analyst Blog:

MCD Sizzles, But FX to Take a Bite

McDonald's Corporation (MCD) continues to report strong worldwide same-store sales but, as expected, foreign currency translation remains a drag on earnings.

Much of the foreign exchange [FX] drag -- expected to be $0.20 for 2009 -- was already factored into estimates or offset by anticipated declines in commodity costs in 2H09. In turn, we are trimming our 2009 EPS estimates by just $0.04 to $3.78 and maintaining our Buy rating on what we consider a defensive safe haven in a dangerous market.

McDonald's announced today that global same-restaurant sales jumped 5.1% in May, with overseas operations remaining strong and those in the U.S. moderating. Comps in in the U.S. grew 2.8% in May -- respectable given the powerful 7.7% rise in May 2008, though slower than the 6.1% reported in April. In Europe, comps surged 7.6%, and in Asia/Pacific, Middle East and Africa they grew 6.4%.

McDonald's U.S. sales were fueled by its successful recent rollout of McCafe coffees. The new premium coffee line has an appealing ad campaign and is likely to draw value-conscious customers away from the $4 lattes at Starbucks (SBUX).

Europe benefited as restaurants added breakfast and extended their late night hours. Notably, Germany -- a very weak area for Burger King -- continued to post positive comps.

Strong sales in Australia and Japan juiced strong Asia/Pacific comps. McDonald's has successfully tailored its menu offerings to local tastes.

China, where McDonald's represents a more expensive meal, remains one area of weakness. China's contraction, however, should have a much bigger effect on Yum! Brands Inc (YUM), which derives 28% of its revenue there.

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2677.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks InvestmentResearch is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

Zacks Investment Research

Secular Semiconductor Growth in QUALCOMM

Bullish Bankers — Sun, 07 Jun 2009 16:00:46 +0000

The NASDAQ has finished up 11 of the last 12 weeks, proving that TECH IS HOT in this market rally. It’s no hidden secret that semiconductors are cyclical and should rebound with the economy. However, timing the market to buy at the bottom is a difficult task for any investor. QUALCOMM, Inc. [QCOM: [...]

Key Telecom Trends: Part 1

Bullish Bankers — Sat, 30 May 2009 10:00:48 +0000

The world is seeing a move to on-demand information and mobile computing, evident by the explosion of smartphones in recent years. Furthermore, bandwidth demand has increased drastically as more people are emailing, texting, downloading applications and watching YouTube on their cell phones, thus requiring networks to be upgraded accordingly. Mobile networks have been upgraded both [...]

Egyptian telecoms a defensive growth play as markets react to row-related rumors

Jason G. Wulterkens — Tue, 19 May 2009 15:35:52 +0000

Egypt’s benchmark CASE 30 stock index, the EGX 30, gained 2.2% yesterday, primarily on the strength of its telecoms and specifically rumors that a row between Mobinil shareholders will soon be resolved. Orascom Telecom (OT) and France Telecom have been engaged in battle over their joint holding in Mobinil–one of three mobile operators in the [...]

Netbooks: The Next Big Tech Product Cycle?

Sean Maher — Fri, 01 May 2009 11:00:00 +0000

div align="left"The computer industry is on the cusp of a revolution. Just as Asian car makers undermined the profitability of Detroit with their cheap and reliable subcompact vehicles, now the emstrongAsian tech industry is threatening to do the same to Silicon Valley with netbooks, simplified mini-laptops optimised for web browsing/strong/em that will retail for as little as $250-300. Despite disappointing Q1 sales, this structural change in the computing industry will profoundly affect some of the biggest tech names. About 25m will be shipped this year, and growth looks set to explode across the emerging world as local middle-class consumers graduate from cellphones to their first computer./divdiv align="left"They were originally conceived at MIT as a solution for the computing needs of schools in developing countries and typically have a 7-10 inch LCD screen, a couple of USB ports, Wi-Fi and sometimes a 3G antennae, and run on Intel’s Atom chip or the ARM11 processor. They are inherently lower-margin for the industry in the same way as selling a subcompact is compared to a fully loaded SUV for Ford, but emstrongthey offer the promise of reaching millions of new consumers in emerging markets who can now graduate from a mobile phone to a computer/strong/em. While US manufacturers were slow to see the potential, Taiwanese and Chinese firms have moved quickly to create a whole new market based on a lower rather than higher product spec. /divdiv align="left"emstrongThis year PC shipments globally are likely to decline 10-15% but the value decline will be closer to 20 percent./strong/em The launch of Microsoft's Windows 7 is set to fuel the flight to lower-cost, simplified PCs because it’s configured to run on the lowest common denominator in terms of configuration. emstrongThis is the first Windows upgrade ever not to require a hardware upgrade. /strong/em/divdiv align="left"For Microsoft, accepting lower margins is strategically rational to keep Google's Linux-based Android operating system at bay in the netbook market. Interestingly, mobile phone operators like Vodafone are now offering 'all you can eat' mobile broadband on monthly subscription with a free netbook thrown in; computers are now following the model created by the phone industry. While volumes will soar over coming years (although forecasts of 120m by 2012 look like typical industry hype, any more than half that would be a good result) emstrongit will to some extent be at the expense of the replacement cycle for high-margin laptops and PCs/strong/em. The net impact on the bottom line for the computer industry may prove negative, but as always amid a structural upheaval, there will be both winners and losers. /divbr /div align="left"emstrongspan style="font-family:trebuchet ms;color:#3366ff;"This article continues at /span/strong/ema href="http://www.deadcatsbouncing.com/"emstrongspan style="font-family:trebuchet ms;color:#cc0000;"www.deadcatsbouncing.com/span/strong/em/aemstrongspan style="font-family:trebuchet ms;color:#cc0000;" /span/strong/em/divbr /div align="left"/divdiv class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/1897020887579135393-6037052458443316327?l=deadcatsbouncing.blogspot.com'//divdiv class="feedflare" a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:63t7Ie-LG7Y"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?d=63t7Ie-LG7Y" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:yIl2AUoC8zA"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?d=yIl2AUoC8zA" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:YwkR-u9nhCs"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?d=YwkR-u9nhCs" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:qj6IDK7rITs"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?d=qj6IDK7rITs" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:F7zBnMyn0Lo"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?i=1h1Zvx5vVGI:x89y0NSa0B0:F7zBnMyn0Lo" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:gIN9vFwOqvQ"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?i=1h1Zvx5vVGI:x89y0NSa0B0:gIN9vFwOqvQ" border="0"/img/a a href="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?a=1h1Zvx5vVGI:x89y0NSa0B0:TzevzKxY174"img src="http://feeds2.feedburner.com/~ff/DeadCatsBouncingMusingsOnTheMarkets?d=TzevzKxY174" border="0"/img/a /divimg src="http://feeds2.feedburner.com/~r/DeadCatsBouncingMusingsOnTheMarkets/~4/1h1Zvx5vVGI" height="1" width="1"/

Zacks Analyst Blog Highlights: Verizon Wireless, Vodafone, AT&T, Deutsche Bank AG and PartnerRe, Ltd. – Press Releases

Zacks Market Commentaries — Wed, 29 Apr 2009 13:22:00 +0000

For Immediate Release

Chicago, IL - April 29, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Verizon Wireless (VZ), Vodafone (VOD), AT&T (T), Deutsche Bank AG (DB) and PartnerRe, Ltd. (PRE).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Tuesday's Analyst Blog:

Verizon iPhone Talks Resurface

Both Verizon Wireless (VZ) (Verizon owns 45% and Vodafone [VOD] owns 55%) and AT&T (T) have announced their quarterly results, and the rumor of a joint iPhone and Verizon Wireless deal has resurfaced.

Wireless revenue at AT&T grew 39% to $3.2 billion, and net wireless subscribers grew by 1.2 million. This growth was due to the sale of 1.6 million iPhone activations and the increase in data service revenue needed by most users of the iPhone (if you want to surf the web you need a data service contract).

Verizon Wireless added 1.3 million net subscribers plus those added from the Alltel acquisition. Verizon had 19.3 million smartphone subscribers at the end of the quarter, and smartphone and PDA sales accounted for 41% of direct device sales.

Deutsche Bank's Strong Bounce

Today, Deutsche Bank AG (DB) reported a strong bounce in earnings, posting net income before nonrecurring items of EUR1.4 billion compared to a EUR985 million loss in the prior-year quarter. This was well ahead of our EUR198 million estimate for the quarter.

This result was primarily driven by a EUR9.8 billion positive swing in trading income to a gain of EUR1.9 billion from a loss of EUR7.9 billion in the year-ago quarter, partly offset by a 95% drop in net gains on financial assets/liabilities to EUR338 million from EUR6.3 billion last year. Net interest income advanced 44% to EUR3.8 billion.

PartnerRe Routs Estimates

On April 27, 2009, after market close, PartnerRe, Ltd. (PRE) reported its 1Q09 financial results. A conference call to discuss the results was held this morning.

Operating income (excluding net after-tax realized and unrealized investment gains/losses, net after-tax realized gain on the purchase of the Capital Efficient Notes [CENts], and net after-tax interest in results of equity investments) for 1Q09 was $155.7 million or $2.72 per diluted share, compared to $110.2 million or $1.98 per diluted share recorded in the prior-year quarter. 1Q09 operating income was substantially ahead of estimates. Better-than-expected results were mainly attributed to lower expenses and positive return on invested assets.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Zacks Investment Research

Vodafone’s Strong Connection – Analyst Blog

Zacks Market Commentaries — Wed, 18 Mar 2009 16:05:46 +0000

We maintain our Buy recommendation for Vodafone Group PLC (VOD), the largest revenue generating international wireless carrier. The company's recent operating results are highlighted by strong growth in overall subscriber count bolstered by record customer additions in its Indian operation.

Additionally, solid growth in service revenue from emerging markets (in Asia and the Middle East) has been accompanied by sequentially improved results across most of the major European markets. Meanwhile, Vodafone continues to accelerate 3G wireless service deployments and expanding network availability across Asia, Eastern Europe and Africa, primarily through acquisitions.

Also, the company is focused on improving shareholder returns through sustainable dividend payouts, which supports our valuation forecasts. Vodafone raised its financial forecasts for fiscal 2009 and is increasingly focused on restructuring and cost saving to improve operational efficiency in core markets.

Anindya Barman contributed to this report.

Read the full analyst report on "VOD"
Zacks Investment Research

Debt Prices Fall as Germany, U.S. Eye Large Tax Cuts

Contrarian Profits — Mon, 05 Jan 2009 19:30:41 +0000

pDebt prices plummet, dollar gains#8230; U.S. stocks fall on profit-taking but rise in Europe#8230; Dollar at 3-week high vs euro on hopes for stimulus plan#8230; Oil gains as Gaza fighting raises Mideast supply worries./p pNews about a planned U.S. stimulus package helped pull investors into the dollar on Monday but U.S. Treasury prices slumped on fears a price bubble is about to pop in the face of a massive wave of fresh debt. /p p European equities advanced for the fifth session in a row, spurred by gains in shares of oil companies on the back of rising crude prices. U.S. stocks were mostly lower as investors took profits on the rally that was racked up in thin trading last week. /p p Oil prices#8230;/p

On the road: Why NZ needs a ‘Magic Jack’ too

Bernard Hickey — Mon, 29 Dec 2008 20:50:22 +0000

I’m writing this from a hotel room in Santa Monica in California. I’m on holiday here with my lovely wife Lynn and our two equally gorgeous daughters, Eilish and Maddie, and am about to embark on an RV trip across America to Orlando in Florida. Lynn will attend a conference on digital scrapbooking at Disneyland in Orlando in a [...]

Double and Triple-Profit Ideas For 2009

Contrarian Profits — Fri, 19 Dec 2008 20:35:29 +0000

pstrongQuote of the week/strong: emI stopped believing in Santa Claus when I was six. Mother took me to see him in a department store and he asked for my autograph. – /emShirley Temple/p pHere are eight stocking stuffers to unwrap./p p1) The conversation between Libertarians and the rest of us (who aren#8217;t on some nutty fringe) would go a lot smoother if we would all agree that laws and regulations do not prevent bad behavior./p pRather, they are merely guideposts to measure the quality of deviance in a way that allows the US#8217;s local, state and federal judiciary to hand out retribution./p pIf you need further proof of this, I offer you two words – Bernard Madoff./p pIn an under-regulated world, Ponzi schemes might not#8230;/p

Today in Russian Business – Oct 30, 2008

Robert Amsterdam — Thu, 30 Oct 2008 07:24:12 +0000

The financial crisis is making itself felt in job losses. The Kremlin is trying to limit the amount of foreign debt taken on by its oligarchs in an attempt to prevent Russian companies from ending up in foreign hands. United Company RusAl will receive a massive $4.5 billion bailout fund - almost half of the total loans allocated - from state-run Vneshekonombank, to help it refinance a Western loan. The UK’s Business Secretary, Peter Mandelson, spoke highly of Russia’s financial prospects as he reached the end of his visit to Moscow, saying that the crisis had boosted diplomatic relations between the two countries. A share buyback for Norilsk Nickel was so oversubscribed that shareholders will only be able to sell 7% of the shares tendered - provided the court injunction to freeze them is lifted. The UK’s Vodafone will sign a strategic partnership with Mobile TeleSystems today. Bakasoftware - Russia’s internet ‘scareware’ scam. Russia and Iceland are to resume talks over a possible loan. Finnish builders are feeling Russia’s construction slump.

Buyback Letter Recommends New Zealand Telecom

CEO Blogger — Wed, 08 Oct 2008 14:12:31 +0000

“New Zealand’s largest company, Telecom New Zealand, provides telecom and information technology (IT) products and services to residential and business customers in New Zealand and Australia. “NZT is now priced at or near its 52-week low; it is also among the best international dividend stocks (7%). “Fourth quarter profits fell as the company suffered from reduced margins [...]

Early Morning Tid-bits:

Notable Calls — Tue, 07 Oct 2008 11:18:00 +0000

- Goldman Sachs downgrades First Solar (NASDAQ:FSLR) to Sell and adds to their Conviction Sell List

NC: The stock will get hit today in a major way. There is little support for FSLR in this mkt. I would not be surprised to see the stock hit par in the coming months. Note that SPWR gets the boot from GSCO as well. Piper lowers FSLR tgt to $250 from $350.

- Morgan Stanley reits Overweight and $175 tgt on Monsanto (NYSE:MON) noting soft commodity price bearsare lurking around the wrong stock. While they do not foresee a $3 bushel of corn, the firm notes they have always modeled Monsanto's pricing power as if the farmer was only going to realize $3 corn (and $8 soybeans). The market appears to have a dispositive view (i.e., expecting $3 corn and for it to result in demand destruction for Monsanto’s products)

Firm believes that farmers will earn a 72% ROIC on the triple stack in F09 at $3 corn (and would still earn a 45% ROIC at $2 corn) and therefore see little risk of demand destruction should new crop corn prices decline further from their present position.

NC: I think MON should be on your bounce radar today.

- FBR is upgrading Freeport-McMoRan Copper & Gold, Inc. (NSYE:FCX) to Outperform with a $85 tgt with a view that the stock is oversold and that the risk/reward is now compelling. Valuation multiples have contracted significantly, and free cash generation is strong even if copper prices were to contract further.

NC: This is a major call in my opinion. When was the last time you saw this one upgraded? FBR has been skittish on the space for quite a while. FCX is trading around 5x 2008/2009 EPS. This one could reach $48-$50 level in a jiffy.

- RBC Capital is out with some positive comments on Research in Motion (NASDAQ:RIMM) saying the BlackBerry 9530 Storm, RIM's first widescreen/touchscreen Smartphone, is expected to be announced this week (possibly Wednesday in London) in a joint Verizon/Vodafone/RIM press conference. Launch still expected 1st week November; they expect 850k Storms shipped Q3/Q4, and 3-4M units FTM. Exclusively at Verizon/Vodafone (who do not carry the iPhone), Storm may be aggressively marketed by these carriers and RIM into the holidays.

Maintains Sector Perform and $90 tgt.

NC: I think you should add RIMM to your bounce list. The stock acted very nicely yesterday. We may get some follow-through today.

Hope it helps,

NC

iBasis Inc. (IBAS) is Building a Base for Future Growth

QualityStocks — Fri, 05 Sep 2008 14:29:22 +0000

Trading on NASDAQ as part of the Internet Software and Services industry, iBasis Inc. is a leading wholesale carrier of international long-distance telephone calls and a provider of retail prepaid calling services. Founded in 1996, iBasis also provides enhanced services for mobile operators. With corporate headquarters in Burlington, Massachusetts, the company is one of the [...]