Tech Stocks: Comparing AAPL and RIMM on a Holiday-Shortened Session

By Ann Sosnowski, Sara Nunnally, and Bryan Bottarelli

Oil Supplies: Venezuelan and U.S. Nationalization?

Diligent Investor
The fact that Apple has announced that the iPhone represents the most popular equipment the tech company has released bodes well for AT&T and its increasing sales, since the company has also ridden high on the success of the Motorola (MOT:NYSE). Apple estimates that 500,000 Apple iPhones were sold on the first two days they were made available.

Material Profits
I’m not saying this action is exactly like Chavez’s nationalization policies, but I would like to hear what capitalism has to say about it.

Trading Tactics
As it turns out, Mr. Hickey (and everyone else who has made this prediction) has been dead wrong.

On Friday, the day the Apple Inc. (AAPL:NASDAQ) iPhone that I so desperately wanted was released to the public, I decided to cash in my free upgrade on my existing plan. After all, I’ve been walking around with the same Motorola cell phone for the last three years (actually it’s been two of the same, since I had the first one replaced two years ago after I dropped it in the toilet a few hours before a long vacation). My current phone has no camera, barely plays audible ring tones which somewhat resemble some of my favorite songs, and definitely doesn’t do well with picture text messages.

I’m most likely the last person on the planet who doesn’t have a camera on my phone.

My current service is courtesy of AT&T (T:NYSE) but was originally under Cingular Wireless before the telecom giant acquired it Just recently, my monthly bills stopped appearing at the door in orange-and-white Cingular envelopes, and began being branded as an AT&T service.

Am I happy with my service? Sure. I don’t suffer any dead spots when I talk to friends and colleagues, and the service is fairly cheap for the perks I get… albeit with an outdated phone.

AT&T’s acquisition of Cingular Wireless was an added bonus from its merger with Bell South, originally announced in March 2006. This deal was anticipated to be worth $18 billion with $2 billion added annually to the value every year until 2010. 98% of shareholders approved the deal.

Since then AT&T has continued to pay quarterly dividends, and even increased its dividend by 6.8% in December 2006 to 35.5 cents per share or $1.42 per share annually.

In its first-quarter earnings, AT&T posted a gain of 21.6% in earnings and a doubling in net income to $2.8 billion compared to the year before.

In response to continuing and increased dividends, as well as continued increases in net income and earnings, shareholders have rewarded the company, by increasing its stock value 17% in just the first half of 2007.

Recently, AT&T’s exclusive iPhone service has also boosted the stock’s price… up 6.8% in only the last four days pre- and post-iPhone debut.

While in the beginning, AT&T caught some flack for activation problems with the iPhone, the telecom provider reassures the public now that the problems have been solved. And come on… only 2% of customers had a problem. With any new or improved technology or service, some problems arise. It’s not worth harping over.

The fact that Apple has announced that the iPhone represents the most popular equipment the tech company has released bodes well for AT&T and its increasing sales, since the company has also ridden high on the success of the Motorola (MOT:NYSE) RAZR. Apple estimates that 500,000 Apple iPhones were sold on the first two days that they were made available.

While the newest toy from Apple is a boon for AT&T, so is its continued insistence on picking up more wireless services. The telecom leader just announced that it is acquiring Dobson Communications (DCEL:NASDAQ), worth $2.8 billion.

Dobson is the biggest wireless service provider in Alaska, and owns 60 wireless markets in 17 states across America. You may know it best by the brand Cellular One. Dobson uses EDGE data technology, which the iPhone also uses instead of 3G, which has raised controversy among tech geek circles. (Supposedly, and believe me, I’m not an expert, 3G data technology is much more superior to EDGE.)

It’s interesting that AT&T, around the same time the iPhone debuts, picks up a cellular provider that uses features from the iPhone, and is prominent in the Midwestern United States.

If this keeps AT&T airspace from being extremely clogged by new iPhone users, so be it!

I believe AT&T’s (T:NYSE) success as a leading telecom provider will continue to boost its share price to $60 per share in the next two years, not only on the success of the iPhone but its continuing acquisition of cell-phone companies.

As long as it’s not too much too soon, shareholders are sure to continue to vote with continued investment… and continue to be rewarded in dividends.

Heck, AT&T is 51.98% of Telecom HOLDRs (TTH:NYSE), which is valued around $40 per share, the same price as shares of T.

Last week, Exxon Mobil (XOM:NYSE) and ConocoPhillips (COP:NYSE) refused to accept the terms of the new Venezuelan contracts for the Orinoco Basin.

They are, instead, pulling out of Chavez country entirely (COP will maintain a 50% share in one platform, however).

These two, along with four other companies, pumped $17 billion in investments into the basin, and hold about $4 billion in debt -- an obligation the state-owned oil company PDVSA says it’s not assuming.

As a result, COP, the single-largest producer in the Basin, will most likely report $4.5 billion in impairment on its Q2 financial report. XOM notes that it probably won’t be affected financially by its pullout, even though it just spent about $750 million in the Cerro Negro heavy oil project.

The four remaining producers, Chevron (CVX:NYSE), Statoil (STO:NYSE), BP (BP:NYSE) and Total (TOT:NYSE), will pick up some of the production left by XOM and COP.

Oil analysts predict Venezuela’s nationalization of its oil resources probably won’t affect supply or gasoline prices here in the U.S., which is the main factor in a new Senate bill that was just unanimously passed last Friday.

The bill, H.R. 556, could block foreign ownership of U.S. oil companies, electric utilities, and other energy-related entities, according to a Platts.com article.

In essence, the bill allows the Committee on Foreign Investment in the U.S. (CFIUS) to review any merger, acquisition or takeover, which could result in foreign control of interstate commerce.

You can probably guess what this is in response to: the attempted acquisition of Unocal by the Chinese National Offshore Oil Company (CEO:NYSE).

While it may be in our best interest to secure oil supplies, I’m not convinced this new bill is the best way to go about doing that.

For example, there are a ton of tiny ethanol companies popping up in the U.S. Let’s say Abengoa (ABG:Madrid), the largest-ethanol producer in Europe, wants to gain a foothold in the U.S. market because it thinks the ethanol industry is about to take off.

In theory, the CFIUS can block Abengoa from buying one of those small companies, even though an acquisition could mean more ethanol production here in the U.S.

A person holding land in the Rockies that may have natural gas resources could be blocked from selling that land to a Canadian company.

Whether CFIUS would choose to block such an acquisition is not clear, but this new bill certainly puts granting foreign ownership at the whim of the Committee.

I’m not saying this action is exactly like Chavez’s nationalization policies, but I would like to hear what capitalism has to say about it.

We are always looking for ways to keep our energy prices low, and securing our own energy supply is one way of doing that. But at the cost of free markets?

Actually, I’d like to hear what you think. Send me an e-mail at e-news@taipanfinancialnews.com, and let me know your opinions on the matter.

I don’t have to tell you that there has been a tremendous “buzz” surrounding the launch of the iPhone -- but here’s an interesting point of view that you won’t get from anyone else.

You see, every analyst, expert, and insider opinion that I’ve read has made the same general prediction:

The introduction of Apple’s (AAPL:NASDAQ) iPhone will steal market share away from Research in Motion’s (RIMM:NASDAQ) Blackberry.

In fact, Fred Hickey, editor of the High-Tech Strategist Newsletter and Barron’s roundtable member, has been recommending RIMM puts for quite a while. Despite the fact that RIMM is up 145% over the last 12 months, he believes you should play RIMM stock down.

And as it turns out, Mr. Hickey (and everyone else who has made this prediction) has been dead wrong.

Since Apple launched the iPhone on June 29, RIMM has jumped from $165.59 per share up to a high today of $216.89 per share. That’s an amazing 31% increase in the last five days alone!

As you can see, this chart clearly shows you that there is enough market share for both Apple and Research in Motion to operate rather successfully within the high-end mobile device niche.

Now I’m sure you’ve heard the old contrarian say that when everyone has the same opinion, it’s usually wrong?

Well, the recent trading activity of RIMM is a perfect illustration of this point. That’s why I feel that both RIMM and AAPL stock will continue to move higher.

So on that note, have a great Fourth of July holiday -- and we’ll talk again at the end of the week!