verizon

As the stock market rebounded in 2009 from one of the worst crises in years, Pat McKeough was invited by Jonathan Chevreau of the Financial Post to appear on his ‘Wealthy Boomer’ telecast. In a two-part interview, Pat aired his views on a wide variety of investment subjects. Now, with the stock market coming off last autumn’s lows, we think it’s an appropriate time to replay the interview. Pat discusses not only specific solutions for volatile markets, but also how his investment advice applies in all market conditions. Here is part two of the interview, entitled “Spreading investments” on YouTube. (View part one here: Pat McKeough’s investment ideas as shown on YouTube.)...

VERIZON COMMUNICATIONS INC. $38 (New York symbol VZ, Conservative Growth Portfolio, Utilities sector; Shares outstanding: 2.8 billion; Market cap: $106.4 billion; Price-to-sales ratio: 1.0; Dividend yield: 5.3%; TSINetwork Rating: Average; www.verizon.com) is the largest provider of wireless
services in the U.S., with 108.7 million subscribers. Wireless accounts for 63% of its revenue. It also has 24.1 million phone and Internet customers.

In 2011, Verizon added 6.3 million new wireless subscribers (net of deactivations) and 278,000 new high-speed Internet customers. These gains offset the loss of 1.9 million phone customers.

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Arris Group, $11.75, symbol ARRS on Nasdaq (Shares outstanding: 121.2 million; Market cap: $1.4 billion; www.arrisi.com), supplies phone and cable companies with the technology they need to deliver video, data and voice services. For example, the company supplies equipment that lets cable operators offer personal video recording (PVR) services, which let viewers record TV programs and view them when it’s convenient. Arris also sells the PVR boxes that consumers use in their homes. In the three months ended September 30, 2011, Arris’s revenue rose slightly, to $274.4 million from $274.3 million a year earlier. Earnings per share were unchanged at $0.11. The company holds cash of $575 million, or $4.74 a share. Its long-term debt of $206.8 million is just 14.8% of its market cap....

Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions. This week, the subject of tech stocks came up as one Inner Circle member asked about a company that makes software that is vitally important for computers and mobile devices, but also faces a highly competitive market....

CounterPath Corp., $1.60, symbol CCV on Toronto (Shares outstanding: 39.9 million; Market cap: $63.8 million, www.counterpath.com), makes voice-over-internet-protocol (VoIP) software for computers and mobile devices. VoIP technology converts analog signals, mainly voices, to a digital format. This makes it possible for users to make low-cost phone calls over the Internet, as well as share video and instant messaging at the same time. CounterPath has over 250 customers in more than 50 countries. The company’s clients include major telecommunications companies, including AT&T, Verizon, BT (British Telecommunications plc) and Mobilkom Austria....

FRONTIER COMMUNICATIONS CORP. $5.35 (www.frontier.com) earned $0.05 a share in three months ended September 30, 2011. That’s down 37.5% from $0.08 a year earlier. These figures exclude unusual costs related to Frontier’s July 2010 purchase of 4 million regular phone, or landline, accounts from Verizon. Revenue fell 8.0%, to $1.3 billion from $1.4 billion. Strong sales of high-speed Internet and video services continues to offset slower sales of landlines and related services. Hold. SNAP-ON INC. $48 (www.snapon.com) earned $1.16 a share in the third quarter of 2011, up 45.0% from $0.80 a year earlier. Revenue rose 8.9%, to $729.9 million from $670.3 million, mainly due to favourable foreign exchange rates and better results from the automotive tool maker’s finance division. The company also raised its quarterly dividend by 6.3%, to $0.34 a share from $0.32. The new annual rate of $1.36 yields 2.8%. Snap-On has maintained or increased its dividend since 1939. Buy. BUCKEYE PARTNERS L.P. $63 (www.buckeye.com) has raised its quarterly distribution for the 30th consecutive quarter, to $1.025 a unit from $1.0125. The new annual rate of $4.10 yields 6.5%. However, Buckeye continues to expand its oil pipelines and storage operations through acquisitions. That adds risk. Hold.

Vodafone Group plc (ADRs), $27.92, symbol VOD on Nasdaq (ADRs outstanding: 5.1 billion; Market cap: $142.4 billion; www.vodafone.com), is a leading provider of mobile telecommunications services, including cellular phones and paging. The company has 379 million subscribers and operates in 26 countries. It also owns 45% of Verizon Wireless, which provides mobile-phone services in the U.S. Verizon Communications, symbol VZ on New York, owns the remaining 55%. In its fiscal 2012 first quarter, which ended June 30, 2011, Vodafone’s revenue rose 3.5%, to $18.5 billion U.S. from $17.9 billion U.S. The company did not report quarterly earnings; it won’t report earnings until the six months ended September 30, 2011. However, for the fiscal year ended March 31, 2011, earnings per ADR rose 3.4%, to $2.75 U.S. from $2.66 U.S. Vodafone continues to benefit from rising use of smartphones, which generate higher profit margins than regular cellphones. In Europe, which accounts for 70% of Vodafone’s revenue, 19.5% of its subscribers used smartphones in the latest quarter, up from 13.6% a year earlier. That helped push up its mobile-data revenue by 24.5%....

ATLANTIC TELE-NETWORK $33.08 (Nasdaq symbol ATNI; TSINetwork Rating: Speculative) (340-777-8000; www.atni.com; Shares outstanding: 15.5 million; Market cap: $512.7 million; Dividend yield: 2.8%) sells telecommunications services to rural areas and other underserved regions of the U.S., Bermuda and Caribbean. Atlantic also owns an 80% stake in Guyana Telephone and Telegraph Company (GT&T), as well as wireless interests in the Caribbean and Bermuda. In April 2010, Atlantic bought over 800,000 wireless accounts from Verizon Wireless for $200 million. These subscribers were mostly in rural parts of Georgia, Illinois, Ohio, Idaho and the Carolinas....

RESEARCH IN MOTION INC. $24 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.1 million; Market cap: $12.6 billion; Price-to-sales ratio: 0.6; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) is paying an undisclosed sum for Dublin, Ireland-based NewBay. This privately held firm makes software that helps wireless network carriers deliver messages, video and appointment reminders to smartphones, tablet computers and other mobile devices. NewBay’s clients include AT&T, Verizon, T-Mobile and Deutsche Telekom. NewBay’s expertise should help RIM develop more Internet-based (or cloud) services, which let users store and access music, photos and other content a centralized server. For example, RIM recently launched BBM Music, a new cloud-based music-streaming service for the company’s BlackBerry smartphones. RIM is a buy.

APPLE INC., $369.80, Nasdaq symbol AAPL, unveiled the latest version of its hugely popular iPhone smartphone this week. This new version, called the iPhone 4S, features a faster processor, a better camera and software that lets users enter commands and search the Internet by speaking instead of tapping the screen. However, investors were expecting an entirely new iPhone instead of an upgraded version of the current model. That caused the stock to fall 6% after the iPhone 4S was announced. However, it soon recovered these losses....