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Trade Alert – Getting ourselves positioned in what will likely be some of the highest flyers

March 14, 2013 by Cody Willard Leave a Comment

I’m going to continue adding to my Juniper and Ciena here. Just adding some more common, and hoping that we do get a big pullback in the broader markets that would give me the opportunity to get outright aggressively long in these names.

Two headlines are adding to my bullishness in the broadband infrastructure sector even today (I was already bullish on the sector as you know):

China Mobile to ramp capital spending 49% this year – capital spending will rise to 190.2 billion yuan ($30.6 billion) in 2013 from 127.4 billion yuan a year earlier, Chairman Xi Guohua told a briefing in Hong Kong today – Bloomberg   

China Mobile Makes Big 4G Bet China Mobile is plowing almost $7 billion this year into building its fourth-generation network, as the world’s largest telecommunications carrier strives to retain its supremacy atop China’s telecom market.

Cap ex is what a company spends on equipment like switches, towers, routers, computers, fiber optic cabling, along with the money they pay for construction of those towers, digging trenches for that fiber optic cables, building racks of servers, and so on.

Subtract $7 billion from $30.6 billion and you get the fact that China Mobile will be spending $23 billion on the broadband infrastructure like Routers and Fiber Optic Switches that support that 4G wireless end connection part. Doing a little more math just off those headlines and you realize that if China Mobile is going to spend 49% more this year on equipment and building up their networks which means they spent about $20 billion last year, which means that China Mobile, one of the fastest growing and largest network providers in the world is about to spend MORE on just the infrastructure equipment and buildout than they did on their entire network last year.

Here are a few more headlines about telcos expanding their cap ex on equipment and network build outs.

Telecom Argentina plans 40% increase in Capex in 2013

Telefónica Capex may reach more than €9.45 billion in 2013

France Telecom and Vodafone to jointly develop fiber optic network …

I think we are getting ourselves positioned in what will likely be some of the highest flyers and best plays in all the markets (while limiting our risks too) as we scale into these telco cap ex plays.

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Filed Under: Trade Alert

Disclosure: At the time of publication, the firm in which Willard is a partner and/or Mr. Willard had positions in some of the stocks mentioned above although positions can change at any time and without notice.

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This does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or cryptocurrency or token any other product or service by Cody Willard or any other third party. Furthermore, nothing in this is intended to provide tax, legal, or investment advice and nothing in this should be construed as a recommendation to buy, sell, or hold any investment or security or cryptocurrency or token or to engage in any investment strategy or transaction. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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