Seeking Alpha
Profile| Send Message|
( followers)  

Nokia (NYSE:NOK) has been having a rough go of it since the recession hit -- so rough, in fact, that Standard & Poor's has dropped the company's investment rating to one notch above junk. But a closer look shows that Nokia is not the only communications stock that has been going through difficult times lately.

Alcatel-Lucent (NYSE:ALU) and Acme Packet (NASDAQ:APKT) have both been dropping since the summer in terms of share price. Alcatel-Lucent in particular has a history of low prices since the recession, much like Nokia, although it did have a brief spike for the first half of 2011. Nokia has been losing its share of the smart phone market, and in an act that I see as frantic to recover some sort of competitive edge, the company has released a cheap Windows-based smart phone. The company's partnership with Microsoft (NASDAQ:MSFT) last year could potentially assist Nokia out of its slump, but I doubt this will be enough.

First of all, Nokia will have to get rid of its own Symbian software and switch everything over to Microsoft programming. I expect that this sort of conversion operation is expensive, and I feel like Nokia probably can't really afford anything costly right now. A smarter move, in my opinion, is the company's efforts to boost app production for the Arab world, where the demand for regionally appropriate applications seems to be quite high right now. I do think this is a good opportunity for Nokia to expand, but I find it hard to believe anything can really save it at this point, other than one of its major competitors going belly-up.

Alcatel-Lucent is up 56% year to date, and it won the Mobile World Congress's Infrastructure Technology award for 2012. It looks to me like this company has a decent future ahead, but also like it will have to work hard to pull out of its current free fall. Luckily for investors, the company seems to have some fight left in it, as evidenced by its co-creation agreement with China Mobile (ADR) (CDL) to work on wireless broadband lightRadio development projects. Judging by recent trends, China Mobile is ready to swing back around. This partnership could be a bonus for both companies involved, in my opinion.

Acme Packet has also been involved in some fruitful collaborations, and I believe that this strategy will help the company in the same way as Alcatel-Lucent. Unlike Nokia, I would say these two stocks have a future, which means that my recommendation to investors is to buy now while prices are low. I think we can expect to see stock value rise back up for both Acme Packet and Alcatel-Lucent. New clients are picking up Acme Packet's products, so it looks to me like revenue will be up for the next while.

With all the gloom surrounding communications stocks, many of which have been losing overall value since 2008, investors are probably wondering if this sector is worth paying any attention to at all these days. My answer would be Motorola Solutions (NYSE:MSI), a company with an EPS of 204.71% this year. While its competitors have been on a downward trend since around August of 2011, Motorola Solutions has been on the rise. The company has just extended its contract with the State Government of Victoria, Australia for emergency services communication. The contract is worth $130 million and will be valid for four years.

This looks like a feather in Motorola's cap to me. When Motorola split into Motorola Solutions and Motorola Mobility Holdings (NYSE:MMI) in January 2012, some investors were unsure where to put their money. Both of the new companies have done reasonably well, in my opinion, although Motorola Solutions currently has a market cap of more than $16 billion, with Motorola Mobility at about $12 billion.

As part of Motorola Solutions' stock buyback program, the company will spend $1.17 billion for shares owned by investor Carl Icahn, previously Motorola's largest shareholder before the split. It can be difficult to gage what sort of effect this program might have on any stock, but in the case of Motorola Solutions, my guess would be that it will not affect it any more negatively than Apple's win in a patent lawsuit against the company appears to have done.

Last month, the courts also dismissed Motorola Solutions' lawsuit against Apple, which does say to me that the company wasted a lot of money. However, intellectual property rights wars appear to be part of the corporate game, so it is to be expected that sometimes companies lose. In the face of these potential setbacks, Motorola Solutions has continued in what looks to me like a focused manner. It has just taken over the Norwegian Tetra network, including some employees. I think that this company is bound to remain competitive if it keeps up its positive results in the way it has been doing.

Motorola Solutions is one of a few communications stocks that are doing well these days. Nokia, Alcatel-Lucent, and Acme Packet are not on my list of worthwhile investments this week. In my opinion, Nokia is extremely unlikely to make it back up at any point. However, I think that Alcatel-Lucent and Acme Packet are worth a second look, since they are involved in operations and projects that I think will push their profitability upward again. A few more days will show us for sure if it is worth buying in now while the prices are relatively low.

In the meantime, Motorola Solutions is where the real action is at, in my opinion. This spin-off company is doing even better than its sister company, and I expect it has the ability to shrug off any minor blows, just as it has been doing all along.

Source: 3 Tech And Communications Stocks To Consider, 1 To Avoid