Starent Is Ready to Break Out

Back when mastodons still walked the earth, cell phones made phone calls, period. So cavemen could call home to say the hunt had been successful, but certainly couldn't send a picture to illustrate their prowess.

Now, of course, cell phones are high-powered multimedia packages that can access the whole world and everybody in it, posting tweets to Twitter, passing thoughts to Facebook friends and sending text messages to everyone. The Internet, photos, games, GPS, email, TV and videos are all flowing into these handheld powerhouses.

You probably take for granted that these different functions all work together despite differences among brands, between new and old handsets and between countries, but this kind of cooperation isn't easy to achieve. So when it works, some of the credit should go to Starent Networks (STAR).

Starent is a leader in designing the wireless infrastructure that delivers multimedia. The company is a leader in the Third Generation Partnership Project ((3GPP)) that's part of what the mobile industry calls Long Term Evolution. Simply put, the project aims to see that 3G phones (and 4G, when they finally appear) can handle the enormous amount of uploading and downloading of bigger and bigger files and more streaming content.

The company has been around since 2000, but only came public in mid-2007. The stock is rising strongly after bottoming in November 2008. It has just broken out after almost a month of base building under resistance at 15. This is a strong stock that has been resisting the negative tone of the market, and its 164% Q4 earnings growth and 30.5% after tax profit margin give fundamental support to a technically strong chart.

I'm a little wary that Verizon (VZ) provides about 60% of Starent's revenues. If Verizon gets a cold, Starent will start sneezing. But it looks like a happy marriage ... at least for now.