Smart Phones are Eating the World Team: Investomics Nima Behkami, PhD Deep Agnani, PhD Amjad Husain, PhD

Bridge between: Wireless Networks and Personal Computing

3.2 billion (mobile operators) vs 1.7 billion people (PC)

Growth opportunity Two-thirds of the mobile phone market has yet to convert to smartphones. Close to a billion smartphones will be sold in 2013, while PC sales will gradually decline. Existing Markets and Emerging Economies

Mobile Value Chain Phone Data Plan Content

Investomics Focus Mobile phone handset business Wireless network operators Mobile content providers handset Mobile content network

Communication Funds (US News) General attributes of communication funds: – Concentrate on telecommunication and media companies of various kinds – Combination of cable television, wireless communication, communication equipment firms and traditional phone companies – Some favor entertainment firms (broadcasters, film studios, publishers, on-line service providers)

Top Two Communication Funds (US News) T. Rowe Price Media And Telecommunications Fund (PRMTX) – Common stocks of media, technology and telecommunications – 80% of net assets in companies engaged in internet, publishing, movies, cable/satellite, TV, telephones, cellular services, technology and equipment – Invest in companies in large-to- mid-capitalization range – Average risk (compared to similar funds as per Morningstar) – Trailing returns: Year to date: UP 11.9% One Year: UP 17.8% – Expenses: 0.81% – Total Assets: $2.74B ProFunds Telecommunications UltraSector Fund (TCPIX) – Non-diversified – Seeks daily investment results, before fess and expenses, that correspond to 1.5X the daily performance of the Dow Jones U.S. TelecommunicationsSM Index – Invest in securities and derivatives that should have similar daily characteristics as 1.5X the daily return index – Above Average risk (compared to similar funds as per Morningstar) – Trailing returns: Year to date: UP 24.7% One Year: UP 40.6% – Expenses: 1.78% – Total Assets: $5.44M

T. Rowe Price Media and Telecommunications Fund 6 Month 1 year 5 year Dow Jones S&P 500 Nasdaq Composite

ProFunds Telecommunications UltraSector Fund 6 Month 1 year 5 year Dow Jones S&P 500 Nasdaq Composite

Approach Similar to T. Rowe Price but no movies (i.e. if movies is the major asset / earner for the company than may not invest in stock) Major invest in companies in large-to-mid- capitalization range Will invest in smaller companies if technology / service may be regarded as “break-through”

Research Methodology Focus on growth stocks in telecom sector. P/B: <5; EPS growth past five years: Positive; Net profit margin: Positive; Performance (Rate of return): Quarter up; P/E: 5-25; Sales growth past five years: Positive; Return on equity: Positive (but cautiously: if company has large debt then should be raising funds by issuing stock rather than borrowing); We consider the probability that the two-thirds of the mobile phone market has yet to convert to smartphones. Developed and emerging economies are going to do well in the telecom sector in coming decade. Holding period on our stock: 6 months to 2 years.

Selected stocks Wireless Providers: AT&T Inc Vonage Holdings Inc (VG) Premier Global Services (PGI) Globecomm System Inc (GCOM) Lumos network Corp (LMOS) Extreme Networks Ltd (EXTR) NeuStar Inc (NSR) Emerging Economies (India): Bharti Airtel (BHARTIARTL) Idea Cellular (IDEA) Data Storage Companies: Brocade communication systems Inc (BRCD) Western Digital Corp (WDC)

Macro Indicators GDP Employment Numbers Walmart Sales Manufacturers' new orders for non- defense capital goods Index of consumer expectations