Google Acquisition of Motorola Mobility Could Be Start of Takeover Season

One takeover begets another. That’s our thinking following the announcement May 22 that Google had officially completed its $12.5 billion acquisition of Motorola’s phone business, called Motorola Mobility. Whenever there is a big takeover like this, a jolt rumbles through the rest of the niche as investors look around for other takeover targets.  

Graphic courtesy of topnews.in

This niche would be telecom, which Motley Fool agrees is in an all-out acquisition mode now because of  the “spectrum crunch” (http://beta.fool.com/liveinvestor/2012/05/22/sprint-says-time-isnt-ripe-merger/4730/?source=eogyholnk0000001).

Here are a few randomly chosen small cap companies that operate in the telecom space:

Bellevue, WA-based Clearwire Corp. (Nasdaq: CLWR, http://www.clearwire.com), a subsidiary of Sprint Holding Co., provides fourth generation wireless broadband services across the U.S. While it’s a company remembered for having one of the worst post IPO first weeks (it lost 17 percent of its market value) it remains a very high-profile stock. For whatever reason, CLWR has been experiencing a selloff throughout May without any real news from management (http://seekingalpha.com/article/595911-investigating-the-may-sell-off-in-clearwire-who-or-what-is-responsible?source=yahoo). CLWR was finally up 10 cents to $1.30 on May 22 with a staggering 48 million-plus shares traded, followed by another 10 million shares traded on May 23, closing down 8 cents at $1.22. Its 52-week range is $1.00-$4.77 and market cap is $640 million. It’s certainly a stock that many people are following.

Another high-profile stock is San Diego-based Leap Wireless International (Nasdaq: LEAP, http://www.leapwireless.com), which provides digital wireless services under the Cricket brand name. The talk has focused on how Leap could be the target of an AT&T takeover, although it’s all rumor at the moment. LEAP is trading near the bottom of its 52-week range of $4.68-$17.66 and market cap is $430 million. LEAP closed on May 23 at $5.47, up 4 cents on the day.

Oslo-based Opera Software (http://www.opera.com) is a maker of free browsers for computers, mobile phones and devices and earned international headlines when its Opera Mini Browser was chosen by Apple to be the only non-Apple browser to be used on the iPhone, which means there are millions of users all over the world. Opera Software trades as OPERA.OL on the Oslo exchange, and also trades in London and Frankfurt. Its ADR listing on the OTCQX market in the U.S. is OPESY.PK. It closed May 23 at $12.57, with no change on the day.

One very small company is Plano, TX-based ViewCast (or ViewCast.com) Inc. * (OTCBB: VCST.OB, http://www/viewcast.com). ViewCast develops hardware and software for the capture, management, transformation and delivery of digital media over IP and mobile networks. New CEO John Hammock has announced his intention to target the telcom space, as well as cable and other international markets. The stock has declined in recent months and closed May 23 at $0.14, down 1 cent for the day. Its 52-week range is $0.08-$0.39. Its market cap is $8.7 million.

Bellevue, WA-based Telanetix Inc. (OTCBB: TNIX.OB, http://www.telanetix.com) is an IP communications service company offering business customers an alternative to phone service and a wider range of support options than traditional telecom providers. Its services include hosted IP voice and conferencing products to text and collaboration products. Like ViewCast, TNIX is very small with a market cap of about $7 million. It’s also thinly traded with an average daily volume of about 1,000 shares. Its 52-week range is $0.04-$5.25.

Plano, TX-based Interphase Corp. (Nasdaq: INPH, http://www.interphase.com) sells broadband communications products to telecom equipment manufacturers for telecommunications and networking infrastructure solutions, among other things. Its stock has been on a slow but steady rise for the past few months, and has a 52-week range of $3.27-$7.39. Its market cap is $32 million. INPH closed May 23 at $4.69, down 3 cents on the day.

* Denotes client of Allen & Caron, publisher of this blog

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