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VoIP: A Shot in Telecom's Arm

Things are looking good for the wireless telecom segment up north: "The industry that provides your cellphone and wired-phone links had its most profitable quarter of the last five years between April and June, says Statistics Canada," the Canadian Press reported. The "wireless segment outperformed the wireline segment by a wide margin," the agency told the CP. "Total operating profits for the quarter amounted to $1.8 billion, a 26.1 per cent gain from the second quarter of 2003."
Canadian Press via CANOE: Telecom Industry Profits Best In 5 years in Q2: StatsCan

The Microsoft of the Wireless Industry?

The Wall Street Journal recently reported on British wireless firm Vodafone's efforts to strong arm handset manufacturers. According to the Journal, Vodafone has said: "Comply with thousands of technical and design requirements or forget about supplying next-generation phones to Vodafone, the world's largest cellphone-services company. Phone makers including Motorola Inc., Samsung Electronics Co. and Sony-Ericsson Mobile Communications Ltd., quickly agreed to Vodafone's demands. Even though they risked turning their phones into anonymous carriers for Vodafone's services, the companies couldn't turn away Vodafone's bulk orders. Even Nokia Corp., the world's largest cellphone maker, acceded to most of Vodafone's demands after a long period of resistance."

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According to the newspaper, "Vodafone's strategy is altering the balance of power in the $500 billion cellphone business. For years, service operators and phone manufacturers coexisted peacefully, bonded by a mutual dependency. Companies such as Vodafone didn't want to miss out on hot new phones and phone makers relied on service providers' huge orders. But as the cellphone market slowed, their goals diverged. Now Vodafone wants to control the look and feel of a cellphone rather than leave those choices to phone makers. ... At stake is control of an everyday device owned by more than a billion people. The winner will be in a position to shape the future of the cellphone business and cream off the profits that come from being a premium brand. The losers, by contrast, could be stuck with a low-margin commodity business, one that's subservient to its former partner. That was the fate of the U.S.'s personal-computer makers that allowed Microsoft Corp. to elevate its own brand over theirs and dominate the discussion about how PCs should operate."
The Wall Street Journal: After Long Peace, Wireless Operator Stirs Up Industry (Subscription required)

Vodafone's strategy certainly isn't hurting the bottom line. The company yesterday "reported a narrower net loss for its fiscal first half, as the mobile telecommunications company increased its share-buyback program, doubled its dividend payment and provided guidance for fiscal 2006," the Wall Street Journal reported.
The Wall Street Journal: Vodafone Posts Narrower Loss, Doubles Dividend for Half (Subscription required)

Cashing in at Google?

Is the Google stock bubble about to burst? Probably not, but the shares -- currently trading in the $170s and $180s -- could be in for a fall, given that company insiders will be free to unload up to 39.1 million shares on the market today, Bloomberg reported. The sell-off can potentially double "the amount of stock on the market and putting pressure on the price. The possible increase of shares in circulation may ease a shortage of stock that helped fuel a rally since the company's initial public offering in August. Shares of Google, the most-used Internet search engine, closed yesterday at $184.87, more than twice the IPO price of $85. Before today, 27.2 million of Google's 273.4 million shares were free for trading. The number of shares available will rise tenfold by mid-February with the expiration of more so-called lockup periods that restrict insider sales! after an initial public offering."
Bloomberg: Google May Decline As Restrictions End On Selling IPO Shares

The New York Times said "investors may find out this week whether there really can be too much of a good thing. To the surprise of some investors and industry analysts, Google's stock price has more than doubled in the three months since its public offering, closing at $182 on Friday. One possible reason for the surge is that relatively few shares of Google have been available to trade." Most companies sell 15 to 20 percent of their shares to the public in an IPO, but Google only sold 7 percent of its stock when it IPO'd in August, the Times said.
The New York Times: Google Investors Await The Dropping of 39 Million Shares (Registration required)

Reuters last night said shares of Google "inched higher a day before the expiration of a restriction period that will allow employees and early investors to sell 39 million shares. Investors appeared to shrug off the prospect of more shares coming to market on Tuesday and sent Google shares up almost 3 percent to around $185. "
Reuters: Google Edges Up As Shares Set To Come To Market

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