Jim Cramer's Telecom Portfolio

Verizon
ATT

Jim Cramer’s Telecom Portfolio

The Defensive Plays
Stock: Verizon
Symbol: VZ
Analysis:
High 4% yield versus ATT’s 3% yield
Best retention rate in the industry, customers like their service and keep it
Verizon increased subscriber by 14.% year over year.
High Retention Rate
Likes Verizon’s triple play: phone, cable internet
Accelerating earnings growth
Added 141,000 customers this quarter
Competition from Vonage will be less of an issue

Alltel
Symbol: AT
Analysis:
Has subscribers, in particular wireless subscribers
Potential takeover target by Verizon and ATT because Alltel can provide subscriber growth
AT&T CFO said “To the extent that there are opportunities to strengthen our wireless business which is a major source of growth we will continue to look at growth opportunities there as well.”
Short supply of wireless stocks, leading to higher PE ratios
Conference call indicated that the company was open to bids
Bottom Line: Believes Alltel is a takeover target


Speculative Telecom Plays

Tell Labs and Ciena Corp
Symbols: CIEN TLAB
Speculation:
Spending cycle for telecoms has come full term, large telecoms ready to buy new equipment

Tell Labs
Symbol: TLAB
Speculation
Really bad quarter didn’t hurt the stock, tells you something is going on with this company
Leads in “Last Mile Technology” produces local Telecom infrastructure
Tell Labs prevents bandwidth bottlenecks
Has 1.6 billion in cash, may be considering a buyback
Levered to access or last mile products


Stock: Ciena Corp
Symbol: CIEN
Speculation
Verizon needs to offset land line losses, investing in “triple play”
67% of Ciena’s business is optical networking, selling switches that go into network backbones that makes them run faster.
Ciena is levered to backbone or transport products, the telecom technology away from your home

Final Thoughts: These stocks are volatile, take quick profits, don’t hold these stocks. These recommendations are TRADES! Both these stocks could be a takeover target by Lucent Technology.