Mr. King: I've been covering telecom services for 10 years, first at Legg Mason and now at Stifel, Nicolaus. Stifel acquired the capital markets division of Legg Mason in 2005. Stifel, Nicolaus is a St. Louis-based, full-service investment firm. We have retail offices around the country as well as a capital markets division, and we have approximately 65 senior analysts.
TWST: What do you cover within telecom?
Mr. King: Telecom services, the Bells, U.S. wireless - to the extent there is a stand-alone U.S. wireless industry anymore - and some international wireless companies as well as several cable services names, such as Comcast, Time Warner Cable and Liberty Global.
TWST: What is the status of the sector right now?
Mr. King: I think from an investment standpoint, at least on the services side, telecom services has been out of favor for a while, certainly for the majority of 2009. It's generally either viewed as a late cyclical or defensive industry, which certainly does not typically do well in the kind of an emerging recovery-type of environment. You have the enterprise segment for the larger telcos that typically is a late cyclical-type of segment within the companies. You also have the two significant growth drivers that the industries enjoyed over the last five to 10 years, broadband and wireless, beginning to slow simply from a penetration or a saturation standpoint. There is very little organic growth with the current set of assets that the telecom companies have. And they have been hampered a bit, as everyone has, by the macroeconomic environment as well. So you saw the Bells in particular and some of the rural independent telephone companies in the U.S. strongly outperform in the fourth quarter of last year when everyone thought the world was falling apart. But now from a market performance perspective, they have underperformed the broader market so far year-to-date.
Tickers included in this excerpt: CMCSK, CTL, FTR, LBTYA, LEAP, MICC, NIHD, PCS, S, T, TWC, VZ, WIN
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