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Wireless Words of Wisdom
02/11/2005 12:00 am EST
Nikhil Hutheesing, a long-time veteran technology editor at Forbes magazine, and editor of the Forbes Wireless Stock Letter, saw his stock picks rise more than 100% in 2003 and more than 50% last year. Here, he offers his best bets on the future of wireless.
"I think the most exciting area of wireless is the deployment of 3G wireless networks. Carriers such as Sprint and Verizon have been spending billions of dollars to deploy this, and now we’re finally beginning to see them coming up around the US. WiFi is another wireless technology that also provides high-speed networks. In fact, it operates at higher speeds than 3G. We’ve seen this technology deployed in places such as Starbucks and McDonald’s. They are becoming more and more pervasive. They provide broadband connections if you are within about 300 feet of an access point. Thirdly, WiMax is a new technology that is coming down the road and will provide even faster connectivity at a larger range of 30 miles from each access point. T here has been a lot of talk about these competing networks displacing each other. On the contrary, in my opinion, I think they will all be here to stay.
"There’s no question that if you want to play 3G, the best stock to own is Qualcomm (QCOM NASDAQ). The company owns the rights to CDMA, which is the technology behind 3G. It’s already very big in the US, Japan, India, and Korea. The company also has a lot more going on. It has the BREW technology, which is an operating system that is increasingly being used by mobile handsets. About a year ago, they were on 14 million handsets using BREW; today, they are on 40 million. A year ago, it was in operation in nine countries; now it is in 24. So BREW is a big benefit to Qualcomm and could generate a lot of revenue.
"I'd note that another very exciting market for Qualcomm is cell phone television. Qualcomm has recently begun to talk about its new system, which will provide television to cell phones. This technology will come in 2006. Basically, Qualcomm has put together a system that it will then deploy to the carriers, who can in turn personalize it however they want. Customers of these carriers will then be able to get television on their cell phones. This is a very exciting opportunity for Qualcomm.
"In WiFi, you might want to consider Proxim (PROX NASDAQ). The company is pretty well positioned in the WiFi space, and the stock is at an attractive level. Another player in WiFi is Cisco (CSCO NASDAQ). The company has been increasingly getting into the wireless home networking system area. It bought Linxys not too long ago. It has also acquired a number of companies to help build wireless infrastructures for corporations.
"In WiMax, which is the technology that we see down the road, a cheap company is Alvarion (ALVR NASDAQ). This is a great company. It’s got the equipment for WiMax and just announced that they launched their first nationwide system as a test. Unlike other companies that are purely a play on WiMax, Alvarion also has a stake in infrastructure equipment for 3G and WiFi networks, which is already providing the company with a stable revenue stream.
"I’d also offer a play that will benefit from all of the various networks. Now that the networks are being deployed, the carriers want to figure out how to make back some of the money they have invested in them—and they do that by keeping us on the network as long as possible, racking up those minutes. Mobile games will be a big business. A good player in this business—which has really aligned itself well with the carriers and with content providers and video game makers— is Jamdat Mobile (JMDT NASDAQ). The stock has declined a bit this year, due to some problems with revenue mix. But the company’s earnings should turn the corner, and I expect the stock to go back up and do well over the next year."
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