Saturday, July 12, 2008

T (AT$T): The iPhone Economy

The iPhone craze has begun and I'm just eating it up. As a current gen iPhone holder, I'm sitting pretty on my current phone however I have a large number of friends, co-workers and the girlfriend jumping on board. On the way back home from work yesterday, I couldn't help myself and I took a detour to the Apple Store only to find a line about 300 people long going around the corner. It was just awesome with the fanfare, talking to random folks in the crowd as well as the people who just walked out with their brand spanking new phone. It looks way nice.

Although all the subscription pricing for the iPhone has increased, the loooong lines outside the Apple Store mean that people don't care. They want and need their iPhone. Recent earnings were positive as well so the bottomline is, there are a lot of good things going for this stock.

T has been battered along with the rest of the market. With its dividend yield, expanding wireless and TV offerings, service reliability and outstanding customer service, any downturn will be temporary. What we need not to forget is that this communications are a necessity that people cannot cut out of their lives. It's not $4 coffee and it's not a new car.

I think AT&T is one of the best values among large cap stocks. Based on the June 6th, 2008 close, the company is trading at 11 times 2009 earnings, has an estimated long term growth rate of just under 10% and pays a dividend yielding just under 5%. Don't forget that it's at a 52 week low.

Good Hunting

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Update 7/14/2008: Apple sold 1 million iPhone 3Gs this weekend (The orignal iPhone took 2 and a 1/2 months to sell it's first million).



Notes:
In Portfolio: Will be
Duration: Until Apple drops AT&T
Patience: Is a virtue