How I am Playing the Smartphone Craze

Since reading the Morgan Stanley Internet Report in December ’09, I have put a great deal of thought into how to best make money investing in mobile.  Up until then I had primarily invested in the mobile device makers like Apple and Research in Motion.  The report reminded me that new companies often win big in new cycles while incumbents often falter.  That has become a guiding principle for me and has led to some contrarian viewpoints. I have decided to list my calls in this blog and update as appropriate.

I. My first play is not very controversial.  APPLE should be the cornerstone of any mobile portfolio.

Blogs:

How am I playing it:

Long or out.

Stock Price:

Stock Price on Close of 1st mention on this blog 3/24/10: $229.37
Price as of 4/16/10: 247.40
Performance since 1st mention: +7.9%
Performance Year to Date: +17.4%

Status:

Long Apple.  Have been  for awhile
As of 4/16/10: Still Long

II. Now I start to ruffle a few feathers. RESEARCH in MOTION will struggle transforming from a mobile phone company (Phase I – before 6/07)  into a mobile computing company (Phase II – post 6/07).

Blogs:

How am I playing it:

Short or out.

Stock Price:

Stock Price on Close of 1st mention on this blog  3/3/10: $70.83
Price as of 4/16/10: $72.03
Performance since 1st mention: +1.7%
Performance Year to Date: +6.6%

Status:

3/31/10: Short on earnings report using April 70 Puts
4/1/10: Closed Puts +35% gain
4/1/10: Short thru Jan ’11 60 puts
As of 4/16/10: Still holding puts

III. This call has the highest probability to be a miss, but I believe that PALM will file for bankruptcy or sold be for less than $6/share.

Blogs:

How am I playing it:

Short or out.

Stock Price:

Stock Price on Close of 1st mention on this blog 3/20/10: $4.00
Price as of 4/16/10: $5.59
Performance since 1st mention: +39.8%
Performance Year to Date: -44.3%

Status:

4/13/10: Short Palm thru May 6 Puts
As of 4/16/10: Still holding puts


IV. A hot smoking OS and plenty of cash; most will think I am far off base on this one.  GOOGLE has the best chance to challenge Apple, but will struggle.

Blogs:

How am I playing it:

Simply an observer. Google may struggle in mobile, but remains a dominant player in internet advertising.

Stock Price:

Stock Price on Close of 1st mention on this blog 4/11/10: $566.22
Price as of 4/16/10: 550.15
Performance since 1st mention: -2.8%
Performance Year to Date: -11.3%

Status:

As of 4/16/10: Still no position

Update:

4/16/10 – Google reported earnings after the market closed on yesterday.  Results met consenus earnings and revenue, but not whisper numbers.  The only data Google has released on its mobile performance is that Android is shipping on 60,000 devices per day. According to a mobile analyst Tomi Ahonen, Android is being shipped on 34 devices, 12 manufacturers and 4 OS versions.  That is a ton of fragmentation and is costing Google real dollars to support. Google’s hiring was up in this quarter and I wouldn’t be surprised if much of it was to support mobile.  Expenses going up with no revenue to support is trouble.  If Google had something worthwhile to say about mobile – it would have said so on the conference call.

The stock was taken to the woodshed and closed down 7.6%.  Some of that may have been attributed to the SEC filing a case against Goldman Sachs.  Since the overall market was only down 1.6%, Google gets most of the credit for its thumping.

V. I got 5 words for you Ubiquitous High-Speed Wireless Connectivity. It’s a mouth full, but it will be more rewarding than the device makers. Mobile Infrastructure may be the best way to play mobile.

Blogs:

How am I playing it:

Searching for companies in the mobile infrastructure space.  Many of the stocks played in this area may be shorter term trades.  Following me on twitter (@TrendRida)  will be the best way to keep up with these positions.  My favorite play as of 4/16/10 is NetLogic Microsystems (NETL).  NetLogic designs semiconductors for communication equipment companies like Cisco, Alcatel-Lucent and Ericsson.  As the equipment companies battle for design wins at the carriers, NetLogic provides the “bullets for their guns.”  NetLogic wins no matter whose guns the carriers choose.

Stock Price NETL ( follow my Twitter stream for other plays):

Stock Price on Close of 1st mention on this blog 4/4/10: $29.40
Price as of 4/16/10: 32.69
Performance since 1st mention: 11.2%
Performance Year to Date: 41.3%

Status:

Went long on 2/12/06 and have added several times since
As of 4/16/10: Still long

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