A great why to find advantageous companies is to look at those driving key technology market trends and generating good business results when the rest of the market is struggling. This story fits Synaptics, the touch-interface specialists, perfectly.

Synaptics makes human interfaces (mostly touchpads and touchscreens) for a variety of PC and smartphone devices. Big customers include Dell, LG, Ericsson, HTC, and Sony. The company has grown fast, roughly doubling revenue and earnings since 2007, at a time when the economy has been dark, at best. During this time, the stock price has been volatile, but largely flat, and the stock price relative to earnings has gotten cheaper and cheaper.

The company announced earnings yesterday, reporting net income of $19.3 million, or 54 cents a share, compared with $12.4 million, or 34 cents a share, a year ago. Synaptics earned 70 cents a share. Revenue hit $145.8 million, a ries of 27% over last year.  

Word on the street is that more iPhone 4 users are complaining about mobile data upload caps (hat tip to Gizmodo). Shocking, isn't it, that as carrier networks are brought to their knees by massive data consumption, that they would try to dial it back? Expect more.

The users are complaining that AT&T is capping the download speeds to 100Kbit/sec in some regions, predominately New York. I have put a call into AT&T to see if they will comment on this.

This is only the beginning. Expect to see more aggressive "traffic management" from service providers as the smartphones proliferate in the market. As we have analyzed in the Rayno Report sponsored whitepaper, "The Data Deluge," mobile data consumption is about to take off with the next generation of smartphones, and the problem of managing data consumption will increase by an order of magnitude.

If you think about what's happened the last 4-5 years in smartphones, it's truly remarkable. Apple has created an entirely new, multibillion-dollar franchise. Nokia and RIM's dominance have been severly damaged. And entirely new app and OS systems have been developed.

What's it all mean? As we surmised back in January, it probably means more pain for the legacy market leaders -- people such as Nokia, Ericsson, and RIM. Clearly their market-share is eroding, but more importantly they are losing their grips on OS and apps markets. Apps willd drive this market forward, and Apple and Google's Android are leading here.

With that, on to the news, which in the tech world today is dominated by smartphones:

• With Verizon rumored to be close to picking up the iPhone, look for them to sell upwards of 12 million (Apple Insider). Boy, Nokia and RIM are totally screwed now.
• ZDNet answers your Verizon iPhone questions (ZDnet)
• Credit where credit is due: Bloomberg had the original iPhone-on-Verizon story (Bloomberg). The big Bloomie can still rock out!
• RIM CEO puts on the gameface, even though quarterly subscribers were weak and clearly the iPhone-on-Verizon story is scary for RIM (WSJ). Rearranging deck chairs, anybody?
• RIM is trying to lure developers to its App store (WSJ). Here, kitty kitty.
• How to troubleshoot the iPhone 4 antenna problems (BGR). 1) Get out of car 2) Put on tin-foil hat.
• Cisco introduced a tablet device! (ZDnet). Picture John Chambers speaking in his soothing tones: "This will really enable collaboration and innovation in the workplace.. " yada yada yada.
• Cool international espionage news of the day: A Russian spy worked in the Barclays office in London (Guardian). I love the fact that she had a LinkedIn profile. Think of all your Facebook friends that could be spies!
• Market looks pretty snoozy today (MarketWatch). Time for the hedgies to spruce of their end-of-Q marketups and markdowns and then grab a facial. Don't be lured into complacency, becuase the next market facial may be coming. 
• Wall Street psychology cheat sheet (The Big Picture).
• Profiles of "Open Carry" advocates (Time). In Montana, this is not news. My friend pointed out that he walked by a guy carrying a shotgun down the street the other day.

 

 

The Rayno Report recently completed "The Data Deluge: A Mobile Revolution," which details enormous changes that will becoming to telecom networks over the next few years.

The explosion of smartphones over the next 2-3 years is likely to put enormous burdens on telecommunicaitons networks, and it's going to force telecom companies to do a lot of upgrading of their equipment and technology, especially the area of the network known as the "mobile backhaul" portion which links cell sites to the core of the network.

This and forthcoming sponsored research papers will be available, free of charge to registered users, in our reseach store, which is here. Our first report is sponsored by Adtran. I am happy to announce that Adtran will be sponsoring this site for the next few months (hopefully longer), and that they have sponsored some research which the Rayno Report has conducted on their behalf.

The reason that the shift from mobile voice to mobile data will have such a huge impact on the industry is that it was orginally architected to handle voice calls, and the move to 4G represents a historic shift. This will create many problems and challenges for the telecom industry. As you can see below they make a lot more money from voice.

Here's just an example of the growth we expect to see in new data-rich mobile applications: the number of mobile phones has grown 460 percent in just seven years. As these types of growth rates extend into the 4G "smartphone market" -- which will accelerate in the next two years -- you will see data on the telecom networks increase by an order of magnitude.

Consider this:

* A 4G network will accomodate data speeds up to 150 Mbit/s. Considering that most 3G networks provide data rates under 10 Mbit/s, this will be a huge jump in data. This will result in an explosion of new data-rich applications and user demand, which will flood the networks with more data.

* New smartphones applications are already blossoming, with billions being downloaded every month. This is shifting the user demand from voice to data. Telecommunications networks will need to accomodate this new demand for data.

* Smartphones currently have under 20% market-share of the mobile phone market. That will probably expand to more than 50% in the next three years, creating even more demand for data networks.

To read more, check out our free sponsored research paper.

 

No, that crummy connection from AT&T on your iPhone is not your imagination. According to some new research from ChangeWave research, AT&T (T) drops three times as many calls as Verizon (VZ). The issues of whose network is better was the heart of Luke Wilson's war. Looks like AT&T is losing. ChangeWave says that in a  survey of 4,040 consumers using North American mobile carriers, Verizon customers reported only 1.5% of their calls being dropped over the past three months, the lowest in the  industry. AT&T reached its all time worst rating in this measure, with customers reporting 4.5% of calls dropped in the last three months. AT&T finished last in the March survey of North American mobile providers. Sprint finished second with 2.4% of calls dropped, and T-Mobile finished third with 2.8% of calls dropped.  The trend shows  an increasing number of dropped calls among AT&T customers surveyed and a decreasing number of dropped calls for Verizon customers.

HP is starting to sound like the first year of the Obama Adminstration. They have their own version of fixing the economy, winning a war, and giving everybody health insurance -- it's beating Cisco with 3Com and then conquering the mobile-phone market with today's announcement that they'll buy Palm for $1.2B. Is HP biting off more than they can chew? Can't say we were right about Palm, or were we? HP did the deal at $1.2B. It surprises me. My premise was that paying over $1B for a company that is losing money and market share, with a negative book value, and $400B in debt is just slightly nutty, but what do we know. Apparently the HP CFO knows more than me.

Research firm Broadpoint AmTech, which has been on top of the solid rally in specialty chipmakers, yesterday raised its earnings estimates and price target for Omnivision (OVTI), a chipmaker that specializes in imaging silicon for applications such as cameras in mobile phones. OVTI, a favorite of the momentum investing crowd, had huge moves from 2002-2006, but then stumbled badly in 2008. Broadpoint AmTech analyst Doug Freedman seems believes it will rally on faster-than-expected earnings growth tied to smartphone growth and other markets driving the adoption of Omnivision's imaging technology. The favorite speculation among investors now is whether it will gain entry into Apple's i-Business. It could also ride the wave of growth of cameras and imaging technology in smartphones in general.

Here’s an interesting company: It’s the second-largest manufacturer of “flex circuitry assemblies” in the world, which go into many consumer devices and mobile phones. It’s grown earnings 16% in the last year, and the company has nearly doubled in size since 2006. Think you’ve heard of it? The company is called MFLEX (Nasdaq: MFLX). I’d be impressed if you named it. The Anaheim, Calif.-based company, whose full corporate name is Multi-Fineline Electronix Inc, keeps a low profile – and its Website lacks some flash. But it’s a profitable company that’s been growing for decades and it’s now positioned well in the growing smartphone market. The flexible assemblies, which it manufactures to put into electronic components that can bend and fold,  are in high demand for products such as smartphones.

Not Lady Gaga, just Gaga. Admob is out with its latest metrics report and it says that smartphone traffic is growing like mad, on pace to nearly triple in a year. Below is Admob's chart showing how smartphones are taking off. Also, Android continues to grow fast, according to AdMob (although Admob's OS data will soon become suspect as it's in the process of being acquired by Google). And Symbian OS share continues to collapse, as its traffic share fell from 43% to 18%. Below is a chart of the OS share according to Admob's measure of apps traffic. Samsung leads the feature phone category, followed by Nokia and SonyEricsson

Service provicers are spending the most time testing the Blackberry OS, but Android-based phones are gaining and the Microsoft Windows and Symbian OS continue to lose share with developers, according to data from mobile developer testing specialist DeviceAnywhere . The data, which measures testing of smartphones on the four major U.S mobile networks, is released monthly with the latest numbers coming from January of 2010. In DeviceAnywhere's measure of time spent on the OS, BlackBerry lead the way with 58.5% usage, up from 50.6% from January of 2009. Microsoft Windows Mobile fell from 22.5%  in January of 2009 to 16.2%% and Android jumped from 2% to 5%. Here are a few bullet points from the research:

Android Testing On the Rise.

• From a standing start in 2009, Android has become the fourth most tested smartphone Operating System in DeviceAnywhere Test Center in the United States.
• The Android-based T-Mobile G1 has risen to become the most-tested device on the T-Mobile Virtual Developer Lab.

Less Time Spent on Microsoft Windows Phones.

• The time spent on Windows Mobile dropped significantly from 26.5% in January ‘09 to 16.2% in January ‘10, as a proportion of total time spent on smartphones in DeviceAnywhere Test Center.

Handset Manufacturers without Established App Stores Holding Up Well.

• While industry discussion has focused on app stores, testing on mobile devices from application developers, web, content and media companies has taken a wider view.
• The second, third and fourth most popular devices for testing on DeviceAnywhere Test Center are Samsung, Motorola and LG respectively, all of which do not yet have US application storefronts.

In terms of popular devices driving usage, the BlackBerry 9000 and the Apple iPhone were the most popular on the AT&T network. On Sprint, it was the BlackBerry Curve (8330) and the Palm Pre. On T-Mobile it was the HTC G1 and the Motorola V2 and on Verizon BlackBerry led the way with the 9630 with the 8330 in the first and second spot.