Smartphone Smorgasbord: How Unlimited Upgrades Could Affect the Market

In a move likely to excite smartphone aficionados regardless of their favorite model, AT&T (T) and T-Mobile USA (TMUS) have announced a new plan that will allow subscribers to upgrade their phones at least once every year. The new stipulations on cell phone contracts, once a source of great frustration for technophiles seeking the most cutting edge models, are designed to encourage more use of the latest smartphones at a time when some are concerned that innovation has slipped off.

Regardless of who wins in the the war to declare smartphone supremacy, the move is sure to impact a number of tech stocks who either develop the smartphones themselves or corollary products. These could include everything from app developers and telephone-service providers to the developers of the glass used in most smartphone screens.

Yahoo's analysis of the two plans suspects that patrons of T-Mobile's Jump are more likely to get the better deal, so long as consumers upgrade their phones a couple of times every two years. Considering T-Mobile's more modest share price, you may have an exciting investment should the company succeed in its bid to become the carrier-of-choice for tech-savvy customers. However it's important to consider that it's still number three in the US Market--and Verizon (VZ), which has more subscribers than both, is rumored to be developing a similar plan as well.   

Say what you will about the virtues inherent in an iWatch when it only takes a few extra seconds to reach the iPhone in your pocket - Apple (AAPL) is hailing 2013 as its most "innovative year ever." The market seems to agree as Apple holds an average target price of $535.19 compared to its current listing at $430.20. Whether the hype is over rumours of a forthcoming iWatch or (more likely) a forthcoming discount model of the iPhone is hard to say.  However the bump in share-price raises the possibility that Apple is poised to make a resurgance after a long dip in the wake of the death Steve Jobs.

It seems strange to say, but one of the most exciting tech stocks out there right now is actually a glass manufacturer. Corning Incorporated's (GLW) earnings have declined over the past two years, which is not always an enticing statistic to investors - however it's important to note that the company has made a number of acquisitions during the past two years which the company's executives hope will generate long-term growth and which investors cite as a sign of talented management. Couple this with the fact that the company's Gorilla Glass is used in the majority of mobile phones, and you have a small cap stock that could yield a handsome return.

Lastly, and most controversially we come to BlackBerry Limited (BBRY). Few remember the days when BlackBerry traded at over a hundred dollars per share, and the once ubiquitous device has been all but purged by its more glamorous and app-friendly counterparts. However, a limited pool of investors have pointed to strong sales of its newest models in the UK as a sign that the Berry might be poised for a comeback, while others lament a marketing strategy that introduces its products to foreign markets before bringing them to the US - where smartphones reign supreme.

Smartphones revolutionized the way carriers and phone manufacturers did business, as some consumers were suddenly willing to sacrifice more reliable service in exchange for a glamorous new device.  In the wake of the first iPhone AT&T tripled the volume of its data traffic in big cities like San Francisco and New York.  By relinquishing their hold on air-tight contracts--Mobile Phone carriers have made a huge concession to the manufacturers, one that is likely to increase flexibility and turnaround in the Smartphone market.

The List

For an interactive version of this chart, click on the image below. Average analyst ratings sourced from Zacks Investment Research.

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Do you think unlimited upgrades will change the balance between service providers and manufacturers? Use this list as are a starting point for your own analysis.

1. T-Mobile US, Inc. (TMUS, Earnings, Analysts, Financials): Offers mobile communications services under the T-Mobile brands in the United States, Puerto Rico, and the U.S. Virgin Islands. Market cap at $4.45B, most recent closing price at $24.37.

 

2. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $404.22B, most recent closing price at $430.20.

3. Research In Motion Limited (BBRY, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of wireless solutions worldwide. Market cap at $4.78B, most recent closing price at $9.13.

 

4. Corning Inc. (GLW, Earnings, Analysts, Financials): Corning Incorporated manufactures and processes specialty glass and ceramics products worldwide. Market cap at $22.11B, most recent closing price at $15.02.

 

(List compiled by James Dennin.  Data sourced from Finviz.)

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T-Mobile US, Inc. (TMUS, Chart, Download SEC Filings) Apple Inc. (AAPL, Chart, Download SEC Filings) Research In Motion Limited (BBRY, Chart, Download SEC Filings) Corning Inc. (GLW, Chart, Download SEC Filings)

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