It was a rough earnings season for technology investors. Once again the headlines proclaimed the end of the personal computer and rehashed the boom in smartphone sales. However, hidden within company conference calls are comments foretelling emergent trends. Sometimes careful listeners can catch a peek at a new industry development giving you the investment edge. Here are three of my favorite quotes and what they mean for investors.
The revolution in your vehicle
The next phase of the mobile revolution may play out in the your car.
“Mobile computing takes wireless capabilities to the next generation of service offering. You have to look at this and think about this like when we went from wireline voice to mobile voice. That was in 1989-1990. And look at 23 years later, what kind of an industry that became. Mobile computing is going to do the same thing. […] One of the examples of how to explore this really early market and show proof to you and ourselves, for example, is automotive.” – BlackBerry CEO Thorsten Heins
And this isn’t just Mr. Heins grandstanding either. Other technology CEO’s expressed similar views during the quarter.
And because of its enhanced security, QNX may become the preferred choice of auto manufacturers. BlackBerry Ltd (NASDAQ:BBRY)’s new CAR 2.1 Platform OS comes with a “compartment” for Android devices. This allows users to separate their Android downloads so viruses can’t access critical systems within the vehicle.
Teens are still friending Facebook Inc (NASDAQ:FB)
In the past year, several reports have claimed teen interest in Facebook Inc (NASDAQ:FB) is waning. But CEO Mark Zuckerberg addressed that concern head on in the company’s conference call.
“One specific demographic I want to address is U.S. teens. There has been a lot of speculation reporting that fewer teens are using Facebook. But based on our data, that just isn’t true. […] But based on the best data we have, we believe that we’re close to fully penetrated in the U.S. teen demographic for a while and the number of teens using Facebook on both a daily and monthly basis has been steady over the past year and half. Teens also remain really highly engaged using Facebook.” – Facebook CEO Mark Zuckerberg
So why are teenagers still friending Facebook Inc (NASDAQ:FB)? It’s the network effect. Even with dozens of other options, Facebook Inc (NASDAQ:FB) is probably the only service with all of your friends. That makes for a pretty compelling reason to stay. If true, this development will take out an important pillar from the Facebook bear thesis.
Peak smartphone
Evidence is growing that the best days of the smartphone industry are behind it.
“If you look underneath the iPhone numbers, […] we saw significant growth clearly in the lower price point year-over-year which for us is iPhone 4.” – Apple CEO Tim Cook
While Apple Inc. (NASDAQ:AAPL) sold 31.2 million smartphone devices, consumers are increasingly choosing the company’s low-margin iPhone 4 products rather than the flagship iPhone 5 model. This is classic late adopter behavior where customers are willing to shave quality for price.
The trend was also mirrored by other big players in the industry. Samsung’s record profit couldn’t hide slowing smartphone growth. Sales of high-end devices fell short of analysts expectations and lower average selling prices ate into the company’s profit margins. Second-tier players like Nokia and BlackBerry Ltd (NASDAQ:BBRY) fared even worse.
It’s clear the smartphone is moving into the second phase of its product life cycle. This is typically marked by falling growth rates and paper-thin margins. Not a fun time to be an investor.
Foolish bottom line
The technology industry is alive and growing but it won’t be a smooth ride for all of the players. But by listening to these quarterly conference calls, investors can sidestep pitfalls and exploit hidden opportunities.
Robert Baillieul has no position in any stocks mentioned. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple and Facebook. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article 3 Can’t Miss Quotes for Technology Investors This Earnings Season originally appeared on Fool.com is written by Robert Baillieul.
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