Bear Case Scenario for Vodafone $VOD

Many suspect Vodafone will overpay for more acquisitions and not utilize capital very effectively.

Telecom is global. Vodafone ARPU is underwhelming. Efforts to migrate customers to 4G higher margin are progressing slowly.

Indian operations are a proverbial thorn. Supreme Court rules Vodafone does not have to pay a huge tax for its acquisition of Hutchison Essar in 2007. Then Parliament passes a new law retroactively looking for the tax. Vodafone needs a political solution not a public dispute.

George Gutowski writes from a caveat emptor perspective.


Bull Case Scenario for Vodafone $VOD

The sales of Verizon has returned substantial cash to shareholders and strengthened the balance sheet considerably. Hard to argue with that.

Stronger balance sheet allows Vodafone to outspend competitors. An important strategic consideration in the arms race.

Increased emphasis on controlling reducing costs. Look at what they are able to do in India. A huge market by any definition.

Recent acquisitions of Kabel Deutschland and Ono allow cost reductions and improved offerings.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario for Rackspace. Will Cloud Computing do them in. $RAX

Rackspace is capital intensive. Small changes in server pricing have huge leverage on bottom lines very soon.

Cloud computing is still very early days. Will all this pan out or blow out.

Basic Cloud will become very price sensitive very quickly. Will Rackspace establish the right niche to be profitable.


George Gutowski writes from a caveat emptor perspective.  

Bull Case Scenario for Rackspace. Do we love Cloud Computing Yet? $RAX

Rackspace has many customers who can logically be converted to cloud computing. They have recently hired Morgan Stanley to look at strategic alternatives which should help boost stock price. Maybe Amazon will buy them to get a leg up. Maybe HP will buy them to block Amazon. Auction time.

Rackspace has done well with high touch customers and has very little turnover which means customers are happy.

NASA technology called OpenStack is being utilized to develop a dominant niche in Cloud Computing. Rackspace seems well ahead on this point.

George Gutowski writes from a caveat emptor perspective.