Due to increasing LTE availability, Qualcomm is expected to see increased sales of its 4G baseband chips, which cost 20 to 60 percent more than their 3G equivalents; Cisco’s ASR9000 edge routers, which are used to aggregate 4G data traffic, will be in higher demand; increased tablet adoption, including Apple’s iPad, will be encouraged; and F5’s networking equipment will be able to provide improved traffic details for wireless carriers.
CHEAT SHEET Analysis: Trends Support the Industry in which the Company Operates
One of the core components of our CHEAT SHEET Investing Framework explains that companies riding macro trends tend to outperform those that don’t. Think of the investing proverb, “A rising tide raises all boats.” As the analysis from Merrill Lynch shows, the trend towards increasing mobility has been spurred ahead by increasing LTE availability, which in turn will boost profits in supporting industries.
“The $1 trillion global telecom service market is riding the big disruptive forces of mobility and LTE, with better economics and attractive ARPU dynamics balanced by growing cannibalization of previously important revenue streams,” according to the report. Companies like Apple, Qualcomm, and the other varied companies listed by Merrill’s analysts are well-situated to take advantage of the rising availability of LTE.