‘Dumb’ Phones Need Internet Access, Too
Motricity is “a great speculative buy, buy, buy,” Cramer said Friday.
The stock first came to his attention during the “Lightning Round” on Oct. 14. But not knowing about, Cramer promised to do the homework on Motricity and return with a call. Well, he’s back and very bullish on this pure play on the mobile Internet.
Where smartphones have Web browsers, regular cell phones do not. So if you want to access the Internet with these so-called (by Cramer) “dumb” phones, you need Motricity. AT&T , Verizon , Sprint Nextel and T-Mobile all use their own branded version of Motricity’s portal, and it offers users a convenient starting point for accessing mobile content. Not to mention, it drives traffic to the telco’s site rather than, say, Google or Yahoo! .
Right now dumb phones make up 79 percent of all mobile devices, and they need a portal. For the carriers, it’s a great way to control the flow of advertising dollars. But Motricity delivers more than just that. The company also optimizes websites for small phones, aggregates information from social-networking sites like Facebook and Twitter, and it combines multiple app stories into one marketplace. Cramer dug up some numbers, and it looks like Motricity has already generated over $2.5 billion in revenues for carrier customers through the sale of content and applications, and it has powered about 50 billion pageviews worth about $600 million in usage-based transport revenues.
Here are some more numbers: Motricity supports over 35 million subscribers on over 2,000 phones, including smartphones running Research in Motion’s BlackBerry operating system and Google’s Andriod OS (they may have browsers, but they still ship with Motricity’s portal). It’s the largest third-party vendor in the space, with an 80 percent market share.
And the mobile Internet is “a huge opportunity,” Cramer said. Only 5 percent of mobile phones sold worldwide last year had Internet access, but that should go to 22 percent by 2012. Plus, with the top four US wireless carriers as customers, Motricity has access to 90 percent of the total US subscriber base.
Cramer also likes the earnings visibility Motricity offers with its subscription-based business model, and the way its massive scale will drive margins. There’s also the company’s push overseas into India and Southeast Asia and chief strategist Jim Ryan. Ryan used to work at AT&T, and he’s the reason that company got an exclusive deal for Apple’s iPhone.
But if Motricity is so great, why didn’t Cramer notice it before? Because the company just came public in June, and it didn’t perform well after hitting the market. That has since changed, now the stock’s enjoying “a much-deserved rise.” So anyone looking to add a little risk to their portfolio—and 20 percent of your holdings in a spec stock is OK, Cramer always says—he or she should definitely consider MOTR.
When this story published, Cramer’s charitable trust owned Apple.
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