Is this the end for Research in Motion?

June 29, 2012

BY BEN GERSTEN, Associate Editor, Money Morning

www.moneymorning.com

Research in Motion Ltd. (Nasdaq: RIMM) must be stupid or have no other options. 

After yesterday's closing bell it announced delays to the BlackBerry 10 phone release, plans to cut 5,000 jobs, and posted a quarterly loss that was five times bigger than anticipated.

RIMM reported a first-quarter net loss of 99 cents a share which was far lower than the 7-cent loss predicted by analysts and well off last year's profit of $1.33 a share for the same period. Many analysts think that RIMM has little chance of survival as a profitable company.

"They either sell, break up the company or die," Matt Thornton, an analyst at Avian Securities LLC in Boston toldBloomberg News. "It is just a question of when." 


Source: http://moneymorning.com/2012/06/29/stock-market-today-is-this-the-end-for-rimm

Investing in the “New China” with this Telecom Market Stock

By G.S. Early, Contributing Writer, Money Morning

 

How would you like to get in on the ground floor of the telecom market in a country I've dubbed the "New China"?

It's a country that boasts:

• 6% annual GDP growth before, after and during and the global economic meltdown.
• The fourth largest population on the planet. It is also one of the youngest (median age is 28).
• A centuries-long social and economic connection to China and every strategic Southeast Asian economy.
• Foreign Direct Investment that has grown exponentially in the teeth of the global crisis.
• A bigger economy than the Netherlands or Turkey.

I'm talking about Indonesia.

It's a place usually found in the back of the mind of most Western investors. It only crops up if there is an earthquake, a tsunami or political unrest in a far flung province.

But the truth is, Indonesia is nestled in one of the most strategic locations on the emerging market map. It neighbors India, Malaysia, Australia and Thailand.

It also has long historical and economic ties to China.

About 3%-4% of the population is Chinese/Indonesian, and they represent a powerful but quiet voice in the Indonesian economy. That influence, which was buried for many years, is now a highly prized asset.

Investing in the "New China"

From the 1970s until recently, Chinese influence in Indonesian society was largely muted by Indonesian politicians. The Chinese language wasn't taught in schools and Chinese history was stricken from textbooks.

But things are changing rapidly.

In the rice-growing region of Lamongan in Java, students are now being required to speak, read and write Mandarin because Indonesian authorities now realize that there is huge economic advantage in reaching out and learning from its economic compatriots.

Having partners is one of the cornerstones of the new economy; without it and a global reach you're not going to make it.

Telecommunications is one of the keys. It's why I like Telekomunikasi Indonesia (NYSE: TLK).

If Indonesia lives up to its growing reputation as the "New China" then TLK is the new Ma Bell.

This telecom giant has a portfolio of information and communication services, including fixed-wire line and fixed wireless telephone, mobile cellular, data and Internet, and network and interconnection services for 237 million people.

What's more, those 237 million Indonesian people are gaining buying power. The country has just cracked its goal of $3,000 GDP per capita.

While this doesn't sound impressive to a Westerner, let me put it in perspective.

In 2002, the Chinese Communist Party set a goal for $3,000 GDP per capita by 2020. The Chinese hit their goal early, in 2008.

The implications of $3,000 GDP per capita are an economic tipping point for a developing economy.

For example, by 2009, Chinese car purchases had grown to 13.6 million, surpassing the United States. In the first quarter of 2011, car purchases in Indonesia were up 30% to 225,000 units and neared 900,000 by year end. The government has a goal of 1 million sales by 2015 and it's looking like it may hit that early.

The point is, Indonesia is on its way. As one of biggest nations in the world, with access to every major developing economy in Asia, the Indonesian story has legs and a lot of potential for investors.

Telkom (NYSE: TLK) Is Firing On All Cylinders

Looking at TLK specifically, the stock has performed remarkably well through the economic maelstrom that even shook India and China. Since late 2008, the stock has returned more than 80%, including a solid dividend that is now around 4.4%.

Being a young and growing economy with a population demanding the goods established economies already have, the growth prospects are astounding.

Between 2005-2010, mobile phone growth was over 30% a year and land line growth was near 20%.

There are now 250 million mobile phone users in Indonesia, with TLK having a hand directly or indirectly in almost every account. In total, TLK directly controls 70% of the mobile business.

As the company expands, it's encouraging to see TLK keeping control of its bottom line by trimming its workforce (more by early retirement and reallocating duties than by layoffs).

It's also developing partnerships with outside firms where it can learn and profit simultaneously.

For example, it was announced earlier this week that TLK and eBay (Nasdaq: EBAY) will be partnering on an e-commerce venture in Indonesia. It makes sense, since the number of Internet users in the archipelago increased by more than 30% in 2011.

And now that the country is increasingly connected, doing business on their phones, iPads or computers will be the next logical step.

On the dividend side, TLK is thinking about boosting its dividend payout ratio from 50% to 65%, which means even more cash for investors on this total return play.

Its low debt levels help keep the dividend - and dividend growth - reliable. And for this fiscal year, the company is projecting a 7%-8% rise in revenues, while it boosted EBITDA to around 58%.

The institutional money is pouring in and has pushed up the stock, but there's still plenty of headroom. Most individual investors have yet to hear this story.

Trading around a P/E of 13, it's slightly more expensive than its Asian peers, but if you're looking for a dynamic long-term total return pick, TLK is a great buy below 34.

source: http://moneymorning.com/2012/04/23/investing-in-the-new-china-with-this-telecom-market-stock/

Tech Sector ETFs: Perfect for Investors

By Don Miller, Contributing Writer, Money Morning

Despite the recent selloff, shares of Apple Inc. (NASDAQ: AAPL) have skyrocketed 48% in the first quarter, dwarfing the 12% gain posted by the S&P 500.

Apple's astonishing rise has also helped to underpin the Nasdaq Composite, which gained nearly 19% in the first quarter -- its strongest showing since 1991.  But that's not the only place to experience the "Apple Effect." Many investors who own technology ETFs -- which hold almost 4% of all Apple shares outstanding -- were rewarded with even better returns.

For instance, theVanguard Information Technology ETF (NYSE: VGT) was up 20.85% in the first quarter. Even better, the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW), was up 21.77%, thanks in part to Apple.  Now the question is: Can Apple's momentum continue to drive technology ETFs higher?

Is Apple Inc. (NASDAQ: AAPL) Too Big?

Apple, the world's largest company with a market cap closing in on $600 billion, has grown so large that the stock accounts for almost 20% of some of the ETFs tracking the technology sector. For example, Apple represents 18.7% of the Select Sector Technology SPDR (NYSE:XLK), which holds about $9.8 billion in assets overall.

Some analysts are warning that tying your fate so heavily to one investment could be extremely hazardous to your financial health. "This astonishing public valuation has had some unexpected effects...chief among them is the risk of overconcentration, as a great many indices and the ETFs that track them are weighted by market cap," said Dave Fry at ETF Digest.

In fact, many investors are concerned that Apple's amazing performance is pushing the whole market up.
According to data compiled by Bloomberg News, the Cupertino, CA-based company has surged 653% since March 9, 2009, accounting for 8% of the S&P's 103% surge.

Humming Along Without Apple Inc.

But while Apple's influence is one of the largest ever by a single stock, the broader market would still be humming right along without it. Fact is, the S&P 500 would have nearly doubled even without Apple. And even if the tech giant's meteoric first quarter rise is excluded, the S&P still would have jumped by 10.4%, its best start since 1998, according to Bloomberg.

"The rally has been much more than Apple," said Howard Ward, a money manager at Gamco Investors Inc. who helps oversee $36 billion, told Bloomberg. "Apple no doubt has added some sparkle to the technology sector, but all market sectors have risen."  Although it's viewed somewhat differently, the surge in tech stocks in 2012 may remind some investors of the dot.com boom, when the technology sector also led the whole market higher. Mobile computing is everywhere. Cloud computing, text messaging and social media dominate the landscape.

But this tech boom isn't being led by the Internet stocks that left baby-boomers holding the bag at the turn of the millennium. After Apple, the top 10 holdings for the four biggest ETFs include household names like Microsoft Inc. (NASDAQ: MSFT), Intel Corp. (NASDAQ: INTC), and International Business Machines Corp. (NYSE: IBM).

All are surging on the strength of new spending by corporations rebounding from the recent financial meltdown. "Tech firms had come out of this recession enjoying double-digit growth in technology investments from corporations...there are still reasons to be confident about longer-term trends favoring tech firms," according to analyst Robert Goldsborough of Morningstar.

Technology ETFs: Perfect for Investors

A large weighting of one stock in an ETF, such as Apple, isn't good or bad, it's just important to know.
Besides giving you an efficient way to get quick, broad exposure to the sector, ETFs are especially suited to the technology market. They are easy to trade and you don't have to pin all your hopes on one stock, even if Apple is a large part of the portfolio.

One thing to think about is whether you want to own Apple itself -- or the entire sector with a dose of Apple. Matthew Hougan, President of ETF Analytics, says investors who are thinking about using ETFs to play the technology boom should ask themselves what they are really buying into. "Is it the technology renaissance? The mobile device boom? Or Apple's specific creativity, brand and ability to execute?" asked Hougan.

If the answer is yes to one of the first two, ETFs are a good way to play it. However, if it's just a yes to the last question, then just buy Apple stock itself, Hougan says. But with or without Apple, technology ETFs are likely headed higher.

Source: http://moneymorning.com/2012/04/17/will-apple-inc-nasdaq-aapl-keep-driving-technology-etfs-higher/

Mobile Cash: The New Currency Wave

By Shah Gilani, Capital Waves Strategist, Money Morning

 

 

You don't realize it but there's a fortune in your wallet right now. What? You don't see it? That's because you're looking in the wrong wallet. Take out your cell phone. In your hand right now is your financial future if you want to get rich. Your smartphone is about to become your new "digital wallet."

When it comes to your credit, your investments, your banking relationships, how you shop, how you are marketed to and how you pay for everything, your new digital wallet will be at the center of it all. Understanding what kind of hardware your wallet takes, who delivers your digital services, and understanding your relationship to digital money will be the keys to making a bundle off of it all.

In fact, as the race to shape the future of e-commerce and e-payments develops, fortunes will be made by investing in the companies destined to be big winners in this fast-growing trend. With that in mind, here's a snapshot of what's here now, where the trend is headed and how you can ride this phenomenal wave all the way to your own private beach.

The Rise of the Digital Wallet

First, you have to realize that you don't use a lot of cash-even though you think you do. The truth is the whole world is using less and less cash. On the low end, Swedes transact commerce in cash only 3% of the time. Europeans pay with cash 9% of the time. And Americans pay in cash only 7% of the time. The rest of the time we're using credit cards, debit cards, prepaid cards, checks, coupons, the Internet, and increasingly, cellphones.

There are several reasons why we're using cash less. One reason we're using less cash is that governments don't want us using cash. Take America, for example. The U.S. used to issue notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000. Printing of large denomination notes stopped in 1945 and they were taken out of circulation by 1969. Besides the cost of printing and minting cash and problems with counterfeiting, governments like to keep tabs on who has money and who is and isn't paying their taxes.That's a lot easier in the digital world, where electronic transfers are easily traceable. Of course, we've also gotten used to the convenience, and most of the time the "safety" of using plastic and electronic transfer schemes to buy goods and services and pay bills.

So, naturally, as more and more of us lighten our pockets by combining our calculators, our day-minders, our cameras, our memories and our access to the wider world with our smartphone touch screens, it makes sense to dump our wallets in there, too. Identifying trends, new technologies, applications, "contact points" and "stakeholders" in the world of digital commerce and payments is the first step to successfully investing in this soon-to-be explosive space.

This One is Going to be Enormous

And make no mistake about it. It's going to be huge. But first, there are a lot of questions that investors need to address and get the right answers to before they can start counting the gains in their digital portfolios.

For instance...

Who are the players now, who is getting into the business, who will the winners be? What role will telecom providers have? Will they continue to just facilitate connectivity, or will they start buying downstream servicers and vertically integrate new technologies? How will banks react to the threat of disintermediation as new players trample their turf? What trends and needs will shape hardware, and who will emerge as the leading device makers? Who will profit from proliferation of new applications? What will drive software innovation and how much room will there be for existing and up-and-coming contenders in the ever-evolving software wars? What role will social media play in the future of e-commerce and how will social media aggregators monetize interconnectivity of their members? Who will emerge as the point-of-contact device makers, connecting buyers and sellers at point of sale spots? Who will command the high ground in the all-important security services battleground? How will data be stored and by whom? Who will own the data and how will data be monetized? What role will merchants play and how will some steal market share from competitors by using new digital wallet applications? How will global use of digital wallets change marketing and advertising and who will be the big winners in this important space?

There are almost as many questions to ask about who the winners and losers will be as there are opportunities to profit from the inevitable future of a digital wallet world. Here's the thing: I'm all about you and me making money on this rapidly unfolding destiny. But it's impossible to set us all off in the right investment direction in a single article. The space is too big. That's why this introduction to the opportunities inherent in the new age of digital wallets is just the beginning. It will be followed up by more comprehensive reporting providing the details on what I've touched on here.

Investing in the Digital Wallet

And as it develops, you will receive more Money Morning articles about emerging trends and companies that are shaping the landscape in this wild-west frontier. Of course I will be recommending lots of specific investments to my Capital Waves Forecast subscribers, but I will also be supplying my good friend Bill Patalon with great company names and investment recommendations for the avid followers of his Private Briefing columns. Why am I going to give Bill some insightful information and picks? Because Bill has been urging me for more than a year to command this exciting space and apply my research resources to it.

And, thanks to Bill I'm overwhelmed by the opportunities I've uncovered. So, he deserves credit and some hot recommendations that I know he can't wait to pass along to his Private Briefing fans. On Wednesday, I'll dig even deeper into this money-making trend. So stay tuned.

[Editor's Note: In the age of the digital wallet every electronic device will need a first-rate security system.
In fact, 2.5 million cell phone subscribers were hit with malicious viruses just in the first quarter last year. We've found a global cyber-security outfit that is uniquely positioned to corner the market on security for these devices. You can learn more about this investment opportunity by clicking here.]

Source: http://moneymorning.com/2012/04/16/turn-your-digital-wallet-into-a-money-machine/

What the Google Stock Split means for Investors

By Diane Alter, Contributing Writer, Money Morning

http://moneymorning.com/2012/04/13/tech-stocks-the-deal-with-the-google-stock-split-nasdaq-goog/

Google Inc. (NASDAQ: GOOG) reported first-quarter earnings after the close yesterday (Thursday) and the Internet search giant did not disappoint - and also delivered a surprising stock split announcement. First quarter profits at the Mountain View, CA-based company soared 61% to $2.89 billion, or $8.75 a share, up from $1.8 billion or $5.51 a share a year ago. Excluding stock-based compensation, profit rose to $10.08 from $8.08 a share. Total revenue was up 24% to roughly $8.14 billion.

Analysts had anticipated earnings of $9.65 a share and revenue of $8.15 billion, according to Thomas Reuters. While the numbers were a little light, the company appeased investors with an upbeat outlook going forward. Google also made an unexpected move: a two-for-one stock split.

Google's Stock Split

Shares rose a tepid 1.1% after hours as the company divulged plans to create a new class of non-voting capital stock, which will be traded on the Nasdaq. 

A stock split increases the number of outstanding shares, while leaving the total dollar value of the shares the same, because no real value has been added as a result of the split. In a two-for-one split, each shareholder receives one additional share for every share owned. A company will often split its stock when the share price has risen so high, many investors find the shares too expensive to buy. Google's "tricky" stock spilt actually gives the company's founders and main shareholders, CEO Larry Page, Chairman Eric Schmidt, and co-founder Sergey Brin, more clout in the company with the maneuver. The new split shares will not have any voting rights, and don't allow shareholders to vote on key issues such as corporate policy and members of the board.

Google already has a dual-class share system. That gives the three founders' stock 10 votes per share, or 66% of the voting power. Industry analysts shared a mix reaction to the move, questioning its benefit for GOOG shareholders.

"What's odd is that we don't believe there was any real demand for this move by institutional shareholders," Citigroup's Mark Mahaney wrote to shareholders. "The positive spin is that the details imply a long-term commitment to the company by the Founders. The negative spin is that the details help ensure that future employee stock/option grants and stock-based acquisitions won't dilute the Founders. It's good to be Founder... A real shareholder wealth creation step would be the paying of a dividend. But we don't expect to see one for several years..."

Mahaney reiterated his "Buy" rating on the stock with a $750 price target, a 15% premium to Thursday's $651.01 closing price. Google didn't disclose a date for the split. It first plans to file papers next week with the U.S. Securities and Exchange Commission. Shareholders will vote on the split at the annual meeting June 21 - and since the three founders hold the majority of voting power, the measure should be approved.

GOOG Pleases with Future Prospects

The company was buoyant about the numbers and animated about its prospects for the future. "We also saw tremendous momentum from the big bets we've made in products like Android, Chrome and YouTube," CEO Page said in a statement. "We are still at the very early stages of what technology can do to improve people's lives and we have enormous opportunities head. It is a very exciting time to be at Google."

Currently Google has the leading market share of search advertisements, and aims to keep it that way. The company also continues to grow in areas outside its traditional search business, making it a dominant force to be reckoned with against established and viable competitors in the mobile, social networking and online video markets. What held GOOG's share price in check following the release was the disclosure that while the number of clicks on Google increased, the amount of advertisers paid per click fell. Paid clicks are a measure of how frequently consumers click on Google's ads.

U.S. paid clicks rose 39% from a year ago and 7% from the prior quarter. But the average cost that advertisers paid Google per click fell 12% during the same period and dropped 6% from the last quarter. Several analysts last quarter cringed at the falling costs per clicks, and Google assured then that more competitive pricing would lead to more clicks. Google was true to its word; click growth came in at double the rate of growth a year earlier.

Surprisingly, the company did not mention its growing social network site Google+, nor did it discuss its pending acquisition of Motorola Mobility Holdings Inc. (NYSE: MMI). According to data from Thomson/First Call, the analysts' mean recommendation on GOOG is a "Buy," with a median target price of $725.

Google stock was down 3.36% to $629.14 Friday by 11:30 a.m. EDT.

Nokia Gets Hammered as its Smartpone Market Share Hangs in the Balance

By Diane Alter, Contributing Writer, Money Morning

http://moneymorning.com/2012/04/12/tech-stocks-nokia-nyse-nok-getting-squeezed-in-smartphone-market/

Nokia Corp. (NYSE ADR: NOK) shares were hammered Wednesday after the company announced its continued smartphone market struggles would weigh on profits in 2012. Nokia, the world's largest maker of cellphones by volume, warned that mobile phone sales will be weaker than forecast in the first quarter due to strong competition in fast-growing markets. After previously thinking it would break even, Nokia now predicts a 3% loss.

The word of warning highlights the steep challenges the Finnish cellphone maker faces in attempts to bolster its smartphone lineup. Cellphone devices and services account for up to 60% of Nokia's sales. The latest lowered profit forecast is the second in less than a year, and the note of caution sent shares of Nokia plummeting to a 15-year low. Nokia last warned of falling profits in May 2011 due to its weak and diminishing presence in the ever-growing, highly contested smartphone market.

And in the wake of Alcoa's surge in the face of positive profits, this also perhaps tells us something important about the markets in general; namely that profits are going to be the main drivers of stocks. To learn more, visit our flagship site at www.goldavalanche.blogspot.com.

Now Nokia needs to figure out how to compete with the raging popularity of Apple Inc.'s (NASDAQ: AAPL) iPhone, while fending off competition among lower-end smartphone models running Google Inc.'s (NASDAQ: GOOG) Android operating system.

Nokia's Falling Smartphone Market Share

The company blames a number of factors for its gloomy outlook.

Nokia cited "competitive industry dynamics continuing to negatively affect the Smart Devices and Mobile Phone business units; timing; ramp-up; consumer demand related to new products; and the macroeconomic environments," as leading factors that will hurt profits this quarter.

While the iPhone has swept sales in the United States, Android models have become more popular in emerging markets. Nokia's cheaper, low-end phones used to thrive in these regions, but have faced pressure. "The company shipped 12 million Smartphones, below our 16.2 million forecast," R.W. Baird's William Powers told Barron's. "The company cited macroeconomic weakness and tougher competitive dynamics, particularly in India, the Middle East, Africa and China. We would note that the iPhone 4s launched in many of those markets in late Q4 and early Q1, though low-end Android devices appear to be the biggest culprit."

The company also attributes the shortfall to a steep drop off in its Symbian platform, its legacy smartphone operating system currently being phased out. But Symbian users have abandoned the platform in droves. Nokia had hoped the Symbian platform would help carry the company during its transition to Windows Phone. CEO Stephen Elop said the company was attracting some support for its new line of phones based on Microsoft's Windows Phone operating system, including the Lumia 900 that just hit stores in the United States last Sunday. In fact, Nokia became the top-selling Windows Phone in 2011 (albeit there was very little competition in the Windows Phone market).

More than 2 million Lumias were sold in the first quarter, Nokia stated, and added that it has "seen sequential growth in Lumia device activations every month since."While the new Lumia launch was widely embraced, it did not create anywhere near the buzz rival smartphone makers have caused with their new models. But a technical glitch announced recently could kill Lumia 900 sales momentum. Some of the Lumia 900 phones are having trouble connecting to AT&T's data network. The companies acknowledged the problem and are removing defective devices from store shelves. But the damage to the brand will hurt Nokia, which is offering affected customers a $100 credit.

Analysts Neutral on NOK

Following Nokia's earnings warning Wednesday, Baird's Powers reiterated his "Neutral" rating on the stock, as did Nomura Equity Research's Stuart Jeffrey.

"We see a continued risk that Q2 proves weaker than even the new guidance implies," Jeffrey told Barron's. "Moreover, unless new feature phone models are an instant hit, there is a risk that Q3 will see another leg down in earnings." Jeffrey said investors betting on Nokia rebounding on a Windows Phone turnaround could be sorely disappointed. "Faster-than-expected declines in Symbian may just bring forward the bad news and allow any potential Windows Phone-based recovery to have an undiluted impact on company earnings," said Jeffrey.

Nokia outlined in Wednesday's conference call that it plans to expand its range of Lumia headsets and make "tactical pricing actions" to improve sales of its basic cellphones. The cost-cutting measures were not specified nor were the amount of the investments. With some analysts slapping NOK with a "Neutral" rating, and another saying it may take a year to see if the company's turnaround plans are working, investors may do best by saying "no" to Nokia for now.

 "I don't think it's fair to judge Nokia until the end of the year," Pete Cunningham, an analyst at England-based research firm Canalys, told The New York Times. "Then, we'll be able to see whether they make it or not." Nokia is set to release financial results on April 19. NOK shares hit a 52-week low Wednesday of $4.20 on above-average volume, an indication many were hanging up on the stock. NOK closed down 15.7% at $4.24.

This Motion Sensor Maker is Profiting From Andriod Smart Phones

By David Zeiler, Associate Editor, Money Morning

http://moneymorning.com/2012/03/19/growth-in-googles-android-pays-off-for-invensense-inc-nyse-invn/

 

The exploding number of Google Android devices has become a cash machine for microchip maker InvenSense Inc. (NYSE: INVN). InvenSense makes the tiny motion sensors used in 70% of Android phones and 90% of motion-sensing Android tablets. Mobile device makers have enthusiastically adopted Android, an operating system developed by Google Inc. (Nasdaq: GOOG), because Google licenses it for free.

Growth in Android devices is exploding. At the Mobile World Congress in Barcelona last month, Google Senior Vice President for Mobile Andy Rubin announced that 850,000 Android devices are activated every single day, for year-over-year growth of 250%. That kind of growth offers tremendous potential for a company like InvenSense, which only went public last November. With 512 million mobile devices expected to be sold by 2014, the market for InvenSense promises to be huge.

InvenSense: The Best Performing IPO of 2011

These motion-sensor chips, called Micro Electro Mechanical Systems (MEMS), are what enable mobile devices to react to tilting or shaking. Although MEMS technology has existed for decades, it was when InvenSense's motion sensing chips were used in the Nintendo Co. Ltd. (PINK ADR: NTDOY) Wii controller in 2006 that the technology started to go mainstream.

The following year, Apple Inc. (Nasdaq: AAPL) used MEMS technology in the iPhone, which triggered the revolution in mobile computing. Although shut out of Apple products so far -- Swiss company STMicroelectronics N.V. (NYSE ADR: STM) has an exclusive lock on Apple's MEMS business - Sunnyvale, CA-based InvenSense has done very well by concentrating on Android devices.

Profit for the December quarter rose 117% year over year, while revenue increased 52%. It marked the second straight quarter of triple digit EPS growth. Analysts expect the hot streak to continue in the current quarter, with a 133% pop in earnings over last year's results. The strong earnings have helped make InvenSense the best-performing IPO from the class of 2011. Currently trading at about $20, the stock is up 167% from its IPO price of $7.50 and 142% from its open price of $8.25.

Beyond Android: More Upside For InvenSense

Many analysts see still more upside for InvenSense as the MEMS market continues to grow. The company's six-axis combination gyroscope/accelerometer is a smaller and more accurate option for mobile device makers. "They have a competitive advantage there," Srinivasan Sundararajan of Oppenheimer & Co. told Investors Business Daily. "They are six months ahead of competitors like STMicro in terms of their ability to integrate accelerometers as well as gyros into one chip."

But the company's fortunes could really take off if it can secure another major piece of the MEMS market. Possibilities include Amazon.com Inc.'s (Nasdaq: AMZN) Kindle Fire tablet, which currently doesn't use motion sensors, or becoming a secondary supplier to Apple. Possible challenges for InvenSense include its ongoing competition with STMicro, which scored a win last fall when Microsoft Corp. (Nasdaq: MSFT) announced it would use STMicro's sensor fusion solution in the Windows 8 operating system due out later this year.

Investors should also bear in mind that the recent run-up in the stock's price may make it prone to a pullback (and a buying opportunity); at its current price, it exceeds the one-year target price of $17.67. Still, the stock shrugged off a prime opportunity for a pullback last week. A lock-up restriction was waived on the sale of shares held by company officers on March 7. That put 6 million shares on the market the same day the company offered an additional 500,000 shares, yet the stock rose.

Clearly, demand for InvenSense stock is high, and the company's dominance of the rapidly expanding market for Google Android devices should keep it there for the foreseeable future.

Why Google Android Can't Compete With Apple's iPhone

April 4, 2012

By David Zeiler, Associate Editor, Money Morning

http://moneymorning.com/2012/04/04/why-google-android-cant-compete-with-apples-iphone/

There's an inherent flaw in Google Inc.'s (Nasdaq: GOOG) Android operating system. The flaw isn't a technical glitch. In fact, most agree that Google's Android is a first-rate mobile operating system that has gotten better with each update. Some even prefer it to Apple's iOS. It's not adoption either. According to recent data from Nielsen, Android's U.S. market share among smartphones has reached 48%, compared to 32.1% for Apple's iPhone. And Google says it has activated more than 300 million Android devices.

The problem is partly the result of Google Android's overall success. The biggest flaw is fragmentation and it will be what prevents Google from defeating Apple Inc.'s (Nasdaq: AAPL) iPhone in the mobile computing wars. There are simply too many versions of Android running on too many (over 1,400) different pieces of hardware. And the issue gets worse with each new version of Android, as older devices are rarely updated.

That's a huge problem for Android developers, who need to write apps that will work on a bewildering array of possible configurations. And it's starting to have an impact. According to Appcelerator's most recent quarterly survey of developers, interest in writing apps for Android phones fell 4.7 percentage points to 78.6%, and interest in writing apps for Android tablets fell 2.2 percentage points to 65.9%.

By comparison, 89% of developers were interested in writing apps for Apple's iOS, a number that has remained steady. "Massive platform fragmentation is a big reason that we're seeing this decline in interest," Mike King, Appcelerator's principal mobile strategist, told Network World. "If you look at all the other numbers such as Android smartphone market share it's on the upswing, but for app developers it's a real challenge."

It's a headache iOS developers don't share. Most Apple customers stay current with the latest version of iOS. And because Apple makes all the hardware, limited to just a handful of models, it's much easier to write an app that runs on nearly all of the millions of iPhones, iPod Touches and iPads in use.

Google Android Users Not Big Spenders

Making matters worse for developers is that Android users tend to spend less money on apps than owners of Apple devices. According to a report last year by Piper Jaffray's Gene Munster, the Google Android Market (recently renamed Google Play) generated just 7% of the revenue of Apple's iTunes App Store.
Munster estimated that in terms of dollars spent on mobile computing apps, Apple has an 85%-90% share. He expects Apple's dominance of app revenue to remain over 70% for the next three to four years.

Some defenders of the Android market claim Munster's methodology is flawed. They point out that Android apps, unlike iOS apps, are sold in multiple online stores. But that, too, creates issues for developers, who need to make sure they cover all their distribution bases with each release. Put it all together and it means Android developers need to put in more effort while making less money than iOS developers. And it's driven at least one developer to throw in the towel.

"Our Android apps aren't making money," wrote Mika Mobile, creator of such games as Zombieville USA and Battleheart, in a March 9 blog post. "Android sales amounted to around 5% of our revenue for the year, and continues to shrink. Needless to say, this ratio is unsustainable." Much of the money Mika Mobile's Android sales did generate got swallowed up by extra development costs - time spent tweaking apps to work properly on the proliferating combinations of new hardware and versions of Android.

One more thing: The lower Android app sales have pushed prices in the Android Market higher. A recent survey by Canalys showed the average cost per app for the top 100 offerings in the Android Market was $3.74, but just $1.47 for the top 100 in the iTunes App Store. The higher prices tend to further discourage buying, which in turn helps keep the prices high.

Hitting Google Android in the Apps

Despite is successes, Google needs to do something about Android's fragmentation to keep its developers from jumping ship. Google needs to make sure the developers can make money. Disenchantment on the part of many Android developers could result in a falling number of quality apps and increasing compatibility issues as older apps are no longer updated.

"Developers go where the money is. End users go where the apps are. Developers create apps where users are," writes veteran tech pundit Joe Wilcox in an article called "iPhone is Unstoppable."

Wilcox theorizes that Apple's ecosystem will be difficult to disrupt. Google will need to fix its fragmentation issues quickly to avoid the fate that Apple's Mac platform suffered in an earlier OS War. "In the 1990s, Microsoft sought to achieve a "standard' platform for developers and succeeded with Windows. Apple is quickly doing the same around iOS, iPhone and iPad," Wilcox said.

The Windows Wild Card

Speaking of Microsoft Corp. (Nasdaq: MSFT), its plans for Windows 8 gives Google something else to worry about in the mobile computing space. Microsoft, until now left on the mobile computing sidelines, will aggressively market Windows 8. And it will likely do a better job of preventing the sort of fragmentation that's stinging Android.

A wave of Windows 8 tablets and smartphones arriving in the fall no doubt will end up competing for the same cost-conscious customers that have been buying Android-powered devices. With only about 70,000 apps, the Windows Phone Marketplace is far behind the leaders, (which have over 500,000 apps each) but Microsoft plans to woo developers in an effort to catch up.

Microsoft and hardware partner Nokia Corporation (NYSE ADR: NOK) announced just last week they'd jointly invest in a $23.9 million mobile app development program over the next three years. Should Windows 8 get traction in the mobile computing market - and history shows that Microsoft is nothing if not persistent - it could further undermine Android. Still, Android isn't going anywhere. It's certainly not in danger of disappearing. But neither is it going to race to dominance, as some predicted last year.  Ultimately, Android's status in the mobile computing market largely depends on how seriously Google and its hardware partners take the fragmentation problem.

"Android is not facing an imminent crisis amongst developers," writes Jeff Duncan for Digital Trends.com. "But, looking out over the next two years, Android (and Google) are clearly going to have to move application development and revenue generation to the same priority level as [hardware] adoption and device activations, or face a stagnating software and content ecosystem."