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Stock Picker Has a 'Buy' On Cells

Andrew Fisher
Thursday, 19 Jun 2008 | 12:30 PM ET

The surging popularity of smart phones and the faltering economy are putting the squeeze on traditional landline telephone service providers -- and Christopher Larsen of Credit Suisse sees opportunity for investors in the wireless space.

"You are seeing a pullback in demand for wire-line phones," he told CNBC. "Look at AT&T and Verizon: 20 percent or more of their revenues comes from a residential market."

And if anything, he says, the rate of change is accelerating.

"If you asked anybody a year ago, they would say, 'Once all the 18-to-28 year-olds get rid of their landlines, then we're done, and the rest of the business stabilizes'," he said. "Now we're seeing that families are getting rid of their landlines, particularly in the tough economy."

Recommendations:

Larsen's got a "buy" on Sprint Nextel.

“The buy on Sprint is really a turnaround story," he said. "If they can get their margins to halfway between where they are today and where the rest of the telecom operators are, that’s tremendous upside in the stock."

He also likes Leap Wireless.

Telecom Takes a Beating
Telecom has fallen amid the slowing economy. Insight on whether big returns are in the near future, with Christopher Larsen, Credit Suisse telecom analyst

Disclosures:

AT&T, Verizon, Leap Wireless and Sprint Nextel are investment-banking clients of Larsen's firm.

Additionally, Credit Suisse has received compensation from Sprint Nextel and AT&T for products and/or services other than investment banking within the last 12 months.

Disclaimer

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