For Immediate Release
Chicago, IL – October 15, 2009 – Zacks.com announces the latest Industry Outlook. Today, Zacks Equity Research discusses the Telecom sector, including Qualcomm Inc. (QCOM), Vodafone Group Plc (VOD), China Mobile Ltd. (CHL), Amdocs Ltd. (DOX) and Tellabs Inc. (TLAB).
Here is the latest on the Telecom sector:
Telecom carriers and equipment providers that offer the most attractive opportunities are focused on 3G wireless technologies, emerging 4G technologies, broadband (DSL) and fiber-to-the-home/premises networking. Last year’s collapse of financial markets has left an indelible mark on many of us. We have seen that sector diversity is a less secure natural hedge in today’s increasingly correlated world markets.
However, the telecommunications industry as a whole offers a number of attributes that are difficult to ignore for most investors.
- Telecommunications is a necessary utility: The need for telecom in both rural and urban areas, and its role in the infrastructure of both developed and developing markets, continues to grow in importance. In addition, economic stimulus plans throughout the world, including the U.S. broadband infrastructure development program — and similar structural subsidies in China and India — may be a boon for selected service providers and equipment manufacturers.
- Massive growth of smart-phones: In spite of the challenging global economy, the growth in the smart-phone mobile market remains on its impressive trend. This primarily reflects a shift in consumer preference towards feature-enhanced PDA devices from ordinary mobile handsets used primarily for voice telephony. This grand opportunity provides massive scope for telecom service providers, equipment manufacturers, chipset developers and wireless tower operators to retain new users and grow revenues moving forward.
- International diversification: While country diversification offers only limited protection in the current highly-correlated world equity markets, it offers hedging capabilities from local economic weakness and associated currency exchange differentials. Therefore, a significant allocation of foreign telecom companies would be appropriate as part of a technology-focused portfolio.
Companies that match well with the aforementioned considerations include Qualcomm Inc. (QCOM), Vodafone Group Plc (VOD), China Mobile Ltd. (CHL), Amdocs Ltd. (DOX) and Tellabs Inc. (TLAB). Each of these firms has a strong financial profile and represents a unique exposure to wireless and international business, along with the financial wherewithal to sustain expansion initiatives.
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