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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (27153)	6/27/2007 3:47:08 PM
From: Jurgis Bekepuris	Read Replies (1) of 78744

It seems rather obvious situation. CHL and other operators want the WAP service, ringtone, etc. market to themselves. So they are trying to cut out KONG and HRAY by various methods mentioned in the article you linked to. That's why KONG/HRAY revenues and earnings are dropping. It is going to get worse from here in that market and I don't see a turnaround possible. Where we go from here? KONG/HRAY may find a new business opportunities probably related to the current business. There are quite a few things that CHL may not covered yet in mobile service space. However competition is brutal in other areas too. They may get bought out by CHL or some other operator who wants their products/technology, so they can offer them themselves. Or they can burn through the cash and die. It's almost "cash in search of business" situation although not quite, since they may have some technology useful for others. If the valuation was at cash, it would be easier to buy, certainly. But it is not clear they will decline to cash... It is a sexy business area and I expect the speculation to move the stock prices quite a lot.

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