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Company

Ticker

Percentage

Shares Traded

Current Price

Sirius XM Radio

(SIRI)

Rose 1.1%

342 Million

$1.72

Cisco Systems

(CSCO)

Rose 0.5%

270 Million

$15.41

Level 3 Communication

(LVLT)

Fell 1.1%

95 Million

$1.72

Research In Motion

(RIMM)

Rose 3.2%

96 Million

$30.12

Oracle Corp

(ORCL)

Rose 1.2%

158 Million

$26.97

Sirius XM

For the week Sirius XM rose 1.1 percent to a price of $1.72 on 342 million shares traded. The stock saw a high of $1.87 on Wednesday but then eventually succumbed to the overall market declines. In previous articles, I reminded Sirius investors on the pending arrival of a price increase in its base subscription rate and then suggested that the increase will come at no less than 2 dollars. In both articles, I used Netflix’s (NFLX) price increases to offer a correlation of what Sirius may experience upon the announcement. In the comparison, I offered the following:

  • With such pricing expertise, I can’t help but wonder if Sirius XM has taken notice? After all, Sirius continues to be compared to Netflix as well as many other subscription services. But what (if anything) has Sirius been able to learn from Netflix? With only four months remaining from its first ability to raise (non-royalty) rates, investors have to wonder that not only does management already know by how much rates will raise but also how to sell it to the subscriber; “It” being “the value.”
  • Each time it has instituted a price increase, the stock has soared. It raised prices recently in July, only seven months after it had already raised rates in November of 2010. With such pricing expertise, I can’t help but wonder if Sirius XM has taken notice? After all, Sirius continues to be compared to Netflix and many other subscription services.

My comparison to Netflix was not well received by several readers; a couple of whom suggested the following:

  • Cameron, you really impugn your integrity every time you make false statements like this.”
  • "Your statement about July is wrong. You can spin it anyway you want by using dates outside the actual range but that is only a weak attempt to obfuscate the truth. You are trying to make a case for the combined November 2010 and July 2011 prices hikes. I am only talking about the July 60% hike."
  • If I understand it right, you are comparing Netflix reaction to a price increase (where Bilton points out some great points to prove you delusional) to what a price increase by SIRI would have on its stock price? That attempt at a predicted correlation is so off base!”

While it is true that since the price increase Netflix has experienced a decline, it does not change the fact that the stock had risen upon the announcement. I then explained that if one if “buy-and-hold guy” (nothing wrong with that), I can see why he/she would take this point of view. But the fact is, from July 1st the stock has risen from $262 to $304. If one held during that period then a loss would likely have been the result. But it does not change the fact of what the stock has done since the announcement; which by the way was hinted upon since the middle of June when the stock traded in the $240s. Also, if we date back to the announced price increase last November, the stock traded at $167 and only six months later, it reached $270 due to the increased revenue; one that Sirius will also experience.

Cisco Systems

For the week, Cisco rose half of 1 percent to a price of $15.41 on 270 million shares traded. I recently listed Cisco amongst my five stocks that not only has reached its bottom but also is poised to double. My reason has had to do with the company’s turnaround and its rededication to its core business. In an article last week, Seeking Alpha contributor, Kraken also expects the stock to double but noted a longer term horizon of five years. While I expect the double to arrive much sooner; likely in 12 to 24 months, I agreed completely with the article’s premise.

  • So why should we like the stock now? It is simple, it's very cheap and CEO John Chambers has already started to restructure the company by cutting cost and going back to its core business model. Due to lower than expected profit, Cisco cut annual costs by $1 billion in July 2011.
  • The company cut around 3,000 employees with an early-retirement program who accepted buyout and 7,000 jobs that would be eliminated by the end of August 2011. Cutting as many as 10,000 jobs means around 14 percent of the 73,400 total employees before curtailment. Cisco is also beating companies like Dell and HP in the X86 market now as the company tries to get its edge back
  • Another reason why I think Cisco should see $30 a share is because Cisco's management has put in place massive buyback programs. Last year, they added another $10 billion to the repurchase program. Although Cisco is known to dilute the stock with employee stock options, overall the shares outstanding are increasing at an overwhelming rate.

After some tough changes by CEO, John Chambers, the company is now looking incredibly fit after reporting profits that beat analysts’ estimates. Excluding some costs, profit was 40 cents a share compared to the expected 33 cents. Sales rose 3.3% to $11.2 billion in the period, which ended July 30, compared with an estimate of $10.98 billion. Maybe Cisco’s success has given me a dose of confidence because I now feel that it may be time for it to take on another venture.

While the market did not take too kindly to HP’s (HPQ) decision to scrap the tablet and possibly its PC business, I think HP’s loss should be Cisco’s gain as Cisco will gain share in its own Cius tablet efforts. It is been reported that the Cius tablet has already generated more interest in application downloads than previously expected; to the degree of 5,000 applications.

Level 3 Communications

For the week Level 3 fell 1.1 percent to a price of $1.72 on 95 million shares traded. Something very interesting occurred this week that I think in which Level 3 investors should take particular interest. On Thursday, an antitrust law suit was filed against AT&T (T) in its proposed bid to acquire T-Mobile. It appears that telecom mergers are now becoming more scrutinized. The lawsuit seeking to block AT&T takeover of T-Mobile is a sign that shows a more aggressive antitrust stance by the U.S. Justice Department that limits prospects for other big telecommunications deals, antitrust analysts said. The question is, how will this affect Level 3’s bid to acquire Global Crossing (NASDAQ:GLBC); A deal that was anticipated to close by the end of the year?

The terms which have recently been agreed upon by both companies allowed Global Crossing shareholders to receive 16 shares of Level 3 common stock for each share of Global Crossing common stock or preferred stock that is owned at closing. Based on Level 3’s closing stock price on April 8, when the deal was first announced, it valued the transaction at $23.04 per Global Crossing common or preferred share, or approximately $3.0 billion. Not to the degree of the $39 billion that AT&T is offering for T-Mobile. Investors should continue to pay close attention to this suit and its result will likely offer a glimpse into the prospect of Level 3’s deal.

Research In Motion

For the week the stock rose 3.2 percent to a price of $30.12 on 96 million shared traded. Last week I detailed why I felt the stock was going to $50. As much as disappointment that investors have felt regarding the stock’s performance, the reality is that RIM’s devices still make up 42% of the smart phones currently in use in Canada. Not to mention, despite what many (including myself) would consider a tough Q4, 2010's global unit sales for Research in Motion actually grew by 38%. Despite growing challenges during that time, RIM has managed to grow earnings every year since 2005.

RIM’s new QNX operating system has the potential to once and for all address the current demands of RIMs consumers, which are apps and lots of them. RIM has had the advantage of seeing the effects of the Apple’s (AAPL) iPhone, Google’s (GOOG) Android as well as Microsoft's (MSFT) Windows Mobile phones on the market. The consumer demands have been pretty consistent. Where RIM once focused primarily on the enterprise, it should now have an opportunity to make some headway on the consumer market. I am now bullish on the company and feel that most of the negative news has now been priced into the stock and more realistic expectations have been set regarding its recent struggles.

Oracle

For the week, Oracle rose 1.2 percent to a price of $26.97 on 158 million shares traded. Oracle investors recently learned of the result of one of the company’s ongoing litigation battles with its competitors. This time it’s with rival SAP. A recently ruled in favor of the German company and has allowed them to pay Oracle $272 million for ill-gotten gains derived from a 2007 security breach. If you don’t understand this ruling is in favor of SAP, you have to consider that the original ruling was for SAP to pay 1.3 billion only 10 months ago in the previous trial. But if you know Oracle, the fight will continue as the company has already said that it will seek the entire original judgment.

Litigation aside, Oracle continues to be one of my favorite holdings. Its ability to be forward looking has caused it to set its sights not only on virtualization, but also cloud computing technologies; which is (in my opinion) the future of computing services. Though the stock has seen a recent decline in value, the company itself has not disappointed. At just under $27 per share, the stock remains incredibly cheap. Value investors would be wise to realize at its current price it has become a stock every investor must own.

Disclosure: I am long SIRI, RIMM, LVLT, ORCL, CSCO.

Source: Analyzing My 5 Favorite Stocks: Still Buying At Current Levels