Nikhil's Wireless World

09/02/2005 12:00 am EST

Focus:

Nikhil Hutheesing is a leading expert in the wireless sector. In fact, his "Wireless Wealth Builders"a group of his favorite stocksare up an average of 40% since last July. Here, the analyst highlights two of his current favorite plays in the sector.

"Qualcomm (QCOM NASDAQ) owns most of the patents of CDMA (Code Division Multiple Access), which is the most efficient technology to distribute data wirelessly. It is now the dominant wireless technology standard in the US and the second most commonly used technology in the world. This is one wireless company that doesn't have to worry about staying power. T he company is spending $800 million to build a nationwide mobile video and multimedia network that will allow you to receive TV on your cell phone, which will be ready for deployment in 2006.

"Besides that, I'm impressed by Qualcomm's recent push toward selling chipsets in Asia, specifically China and India. Qualcomm's stock now trades at 33 times 2005 earnings estimates. While that isn't a bargain basement price it is understandable given the company's great prospects and comparatively attractive growth rates. If you don't already own shares of this blue-chip wireless pioneer, I recommend you buy them at current market prices. You are not only buying a great business model and an innovative company, but also great management.

"As wireless networks get deployed, the best investment opportunities switch away from the infrastructure plays to the content companies. So there is opportunity in gaming companies. One play in this area is Jamdat Mobile (JMDT NASDAQ), which provides games and ring tones. The stock had been moving up very quickly. However, the share recently fell 25%. This drop was because the company has a lawsuit over their name, which will result in a hit to earnings and revenues this quarter. However, the basic strategy of the company is terrific.

"Jamdat has deals with many of the cell phone carriers and I think that this will prove to be a great company going forward. Its main business right now is building multi-player games, which brings thousands of people together over a network. This technology doesn’t work all that well yet. However, the idea is that eventually people will be paying their service providers money in order to play games online. The wireless operators need these types of revenue generating products in order to recoup their investment in building out their networks."

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