verizon

The best way to profit from rising use of smartphones and other wireless devices is through carriers, such as AT&T and Verizon. That’s because they have more revenue sources than smartphone makers. These include traditional phone, Internet and TV services. This diversity limits their reliance on a single device. AT&T INC. $27 (New York symbol T; Income Portfolio, Utilities sector; Shares outstanding: 5.9 billion; Market cap: $159.3 billion; Price-to-sales ratio: 1.3; WSSF Rating: Average) sells traditional telephone services to 45.7 million consumer and business customers in 13 states. Its wireless division has 81.6 million customers nationwide. Since 2007, AT&T has been the exclusive U.S. carrier of the hugely popular Apple iPhone. The company attracted a record 3.2 million new iPhone users in the three months ended September 30, 2009. About 40% of these customers were new to AT&T....

DragonWave Inc., $9.33, symbol DWI on Toronto (Shares outstanding: 36.1 million; Market cap: $337.1 million), makes equipment that wirelessly transmits broadband voice, video and other data. This lets customers send and receive data in locations that have not been reached by fibre-optic telecommunication networks. The company first sold shares to the public for $3.95 each, and began trading in April 2007. In the three months ended August 31, 2009, DragonWave’s revenue jumped to a record $35.5 million from $10.6 million a year earlier. Earnings were $6.3 million, or $0.22 a share, compared to a loss of $1.7 million, or $0.06 a share, a year earlier....

GARMIN $32.48 (Nasdaq symbol GRMN; SI Rating: Speculative) (913-397-8200; www.garmin.com; Shares outstanding: 200.7 million; Market cap: $6.5 billion) faces an uncertain future because selling prices for its devices are falling and competition is increasing. Motorola and Verizon Wireless recently announced the first smartphone to feature Google’s Android 2.0 operating system for mobile devices. The new phone will allow users to access Google Maps Navigation, which provides turn-by-turn voice guidance as a free feature of Google Maps. The phone will also offer additional features, such as live traffic and business information, and Google Street View, which shows users photographs of the streets they look up. Garmin makes 80% of its sales from selling consumer products, like hand-held GPS receivers, portable navigation devices for cars, and fixed-mount GPS systems that are used in cars and boats. As the announcement from Verizon and Motorola shows, this market is increasingly threatened by rapidly evolving GPS applications in smartphones, including Apple’s iPhone, Palm’s Pre and others....

MOTOROLA INC., $8.57, New York symbol MOT, rose 5% this week after it reported better-than-expected earnings. The company also launched two new smartphones. In the three months ended October 3, 2009, Motorola earned $12 million, or $0.01 a share. If you exclude unusual items, it would have earned $0.02 a share. Analysts had expected the company to break even. In the year-earlier quarter, Motorola lost $397 million, or $0.18 a share. Among the unusual items the company recognized in the quarter were costs related to its plan to break itself into two publicly traded companies — the mobile-devices business, and the wireless-infrastructure and home-equipment operations. Motorola lowered its costs during the quarter, including an 8% cut in its workforce and the closure of some plants; these were the main reasons for the improved earnings. Motorola feels that these reductions will save it $1.9 billion in 2009. That’s up $100 million from its previous estimate....

GARMIN LTD., $30.26, symbol GRMN on Nasdaq, fell over 20% this week after Dutch-based rival TomTom reported that average selling prices for its devices were 8% lower than analysts were expecting in its latest quarter. Like TomTom, Garmin makes navigation devices that use the global positioning system (GPS). The company reports its results next week. Also this week, Motorola and Verizon Wireless announced the first smartphone to feature Google’s Android 2.0 operating system for mobile devices. The new phone will allow users to access Google Maps Navigation, which provides turn-by-turn voice guidance as a free feature of Google Maps. The phone will also offer additional features, such as live traffic and business information, and Google Street View, which shows users photographs of the streets they look up....

TEMPUR-PEDIC $21.15 (New York symbol TPX; SI Rating: Speculative)(800-878-8889; www.tempurpedic.com; Shares outstanding: 74.9 million; Market cap: $1.6 billion) makes and distributes Swedish mattresses and neck pillows made from its own Tempur material. The material conforms to the body to provide support and help alleviate pressure points. Tempur-Pedic sells its products in over 80 countries. In the quarter ended September 30, 2009, Tempur-Pedic’s earnings rose 6.7%, to $25.7 million, or $0.34 a share, from $24.1 million, or $0.32, a year earlier. The gain came despite an 11.4% drop in revenue, to $224.1 million from $252.8 million. Earnings benefited from improved efficiencies at its plants, and lower raw-material costs. ...

ALCOA INC., $14.24, New York symbol AA, rose 10% this week after it reported better-than-expected earnings and sales. In the three months ended September 30, 2009, the aluminum maker earned $73 million, down 76.1% from $306 million a year earlier. Earnings per-share fell 81.1%, to $0.07 from $0.37, on more shares outstanding. Alcoa has seen weaker aluminum demand from clients in the automotive, aerospace and construction industries. In response, the company has consolidated plants and laid off workers. These moves should lower Alcoa’s costs by a total of $2.4 billion a year. If you exclude restructuring costs and a gain related to its increased investment in an alumina-refining operation in Suriname, the company would have earned $0.04 a share in the latest quarter. On that basis, analysts were expecting Alcoa to lose $0.10 a share....

ATLANTIC TELE-NETWORK, $50.19, symbol ATNI on Nasdaq, has raised its quarterly dividend by 11.1%, to $0.20 a share from $0.18. The shares now yield 1.6%. This was the company’s eleventh consecutive annual dividend increase. In June, Atlantic agreed to buy more than 800,000 wireless accounts from Verizon Wireless for $200 million in cash. The subscribers are mostly in rural areas of Georgia, North Carolina, South Carolina, Illinois, Ohio and Idaho. The deal should close by the end of this year. These new accounts will bring Atlantic’s total number of wireless subscribers above one million, up from 200,000 today, and make it one of the largest wireless carriers in the U.S....

MOODY’S CORP., $18.85, New York symbol MCO, fell nearly 20% this week on new allegations that the company deliberately inflated its ratings on mortgage-backed securities and other complex investments. Bond issuers pay fees to rating agencies like Moody’s to rate their bonds. Some investors have sued the company, accusing it of knowingly issuing higher ratings so it didn’t risk losing these fees. Moody’s has denied the allegations. The stock also came under pressure after billionaire investor Warren Buffett lowered his stake in the company to 16.6% from 20.4% last July. As well, a court recently rejected a long-standing defence used by rating agencies that their opinions are protected under free-speech rights....

INVACARE CORP. $23 earned $0.30 a share in the second quarter of 2009, up 36.4% from $0.22 a year earlier. Much of the gain came from the company’s ongoing restructuring plan, which started in July 2005. Under the plan, Invacare is shifting production of wheelchairs, motorized scooters and other mobility and homecare products to low-cost countries and simplifying its product lines. Revenue fell 7.7%, to $412.5 million from $447.2 million, mostly due to unfavourable foreign-exchange rates. Buy. UNITED TECHNOLOGIES CORP. $63 still expects to earn about $4.08 a share this year, despite slow demand for its aerospace and construction-related products. As well, it expects its 2010 earnings to rise, mainly due to cost cuts. Buy. VERIZON COMMUNICATIONS INC. $30 has raised its quarterly dividend by 3.3%, to $0.475 a share from $0.46. The new annual rate of $1.90 yields 6.3%. Best Buy.