Recently, Brightpoint Inc. (CELL) received a shot in the arm as it has struck a deal to globally distribute the latest Android-based smart-phone, the “Nexus One.” Nexus One is Google Inc’s (GOOG) first smart-phone developed by HTC Corp. of Taiwan.
Brightpoint is the first company to officially secure rights from HTC for distribution and logistics related to Nexus One. Brightpoint has an existing global partnership with HTC Corp.
We believe this contract win is critical for Brightpoint’s near-term growth. The company is a leader in the global distribution of wireless devices and the provision of customized logistic services to wireless equipment manufacturers and carriers. However, soft demand for wireless devices and the precipitous reduction of average selling prices, attributed to the global economic recession, continue to impact its top-line.
The company estimates wireless devices handled at approximately 22 to 24 million units for the fourth quarter of 2009, and approximately 81 to 83 million units for full fiscal 2009. This is a reduction of approximately 5% from fiscal 2008.
The new agreement with HTC will also include fulfillment services relating to Google’s web store in the U.S., like inbound receiving, inventory management, shipping of end-user orders and transportation management.
The company has reduced its debt level and operating expenditures. The Board of Directors of Brightpoint has increased its share repurchase plan by another $30 million to $80 million. According to our assessment, the long-run fundamentals of the company remain strong, primarily due to the growing demand for 3G enabled smart-phones. We maintain our Neutral recommendation.
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