Written on Engadget.com today:
AT&T (well, Cingular at the time) and Apple entered into a very peculiar marriage of convenience to bring the original iPhone to American airwaves whereby AT&T shelled out cash to Cupertino each and every month for iPhone subscribers on its network (the exact terms were never publicized). Very simply, Apple had something good; they knew it and leveraged it to the very maximum of their ability, dangling the tantalizing prospect of endless publicity and droves of new customers in exchange for the deal. That same logic left Apple struggling to find partners in Europe, though, ultimately deploying the 2.5G model in just five markets there under AT&T-like terms.

Fast forward to July 2008 and the iPhone 3G, and the picture has changed just a bit. At least 70 countries will see the updated version before the year’s out, but why the sudden change of heart by the world’s carriers? Turns out the answer might lie in a revamped sales model that more closely mirrors the deals carriers set up with other manufacturers. AT&T has gone on the record saying that it’ll take a huge revenue hit — 10 to 12 cents per share both this year and next before finally planning on profitability in 2010 — in order to deeply subsidize the phone on its own accord, taking Apple and its precious monthly kickbacks out of the picture. This is presumably the same kind of setup Apple is offering to carriers around the globe, a setup that they’re already well acquainted with that provides a clear path to black ink (or so they would hope, anyway).

AT&T has been beaten down due to the cost of discounting the iPhone. This action will cost the company earnings in the short run but will pay off BIG Long term. Apple and AT&T basically wiped out the competion today in one huge price reduction. Load up on AT&T for September earnings.

Summary of IPhone deal on thestreet.com today:

Though AT&T (T - Cramer’s Take - Stockpickr) has exclusive access to provide service for Apple’s (AAPL - Cramer’s Take - Stockpickr) 3G iPhone in the U.S., the telecom giant’s contract is about to extract a hefty price in the near term.

The new 3G iPhone is cheaper than the original version, costing $199 for the 8-gigabyte version and $299 for the 16-gigabyte phone, and AT&T says at those prices its earnings and margins will be pressured through 2009.

“Under the revised agreement, which is consistent with traditional equipment manufacturer-carrier arrangements, there is no revenue sharing, and both iPhone 3G models will be offered at attractive prices to broaden the market potential and accelerate subscriber volumes,” AT&T said in a statement. Following the news, AT&T shares fell 1.7% to $37.56.

AT&T said it expects earnings to be cut by 10 cents to 12 cents a share in 2008 and next year. This year’s adjusted consolidated operating income margin should be about 24%. For this year, analysts expect AT&T to post earnings of $3.12 a share, according to Thomson Reuters.

However, AT&T believes the new device will bolster its results after the initial hit. “As recurring revenue streams build without any further revenue sharing required, AT&T expects the initiative to turn accretive in 2010,” the company said.

AT&T also said that unlimited iPhone 3G data plans for consumers will be available for $30 a month, while business users will have to pony up $45 a month, in addition to a voice plan.

Jim Cramer writes on thestreet.com

Abbott Laboratories (ABT:NYSE) is off about a half of a percent today, and I am going to buy another 300 shares on that weakness. This is an excellent-quality health care play, and I have been waiting for the shares to pull back to own more.
This story is about the diversity of its product portfolio as well as continued market share growth in its largest drug, Humira. Humira, which treats rheumatoid arthritis, is a $4 billion drug and has six indications. The company also has other drugs in its pipeline, as well as three other divisions that are poised for good growth — diagnostics, vascular and nutrition.

There is an article today that suggests the FDA is reviewing all arthritis drugs on the market because they are linked to cancer in children. The FDA has received 30 cases in more than 10 years, but it was unclear as to how many children had taken the drugs or whether the cancer incidence among them was higher than would be expected. The FDA also said that the potential benefits of the medicines outweighed the potential risks at this age level. I think a lot of this is noise, and ABT management has said there have been no instances of cancer in children in clinical trials while taking Humira.

I think that this issue is not material to the growth of Humira, nor will it impact the market share gains that it has achieved. There are also many other products that the company has to fuel its growth in the future. The valuation is attractive, especially relative to big pharmaceutical companies, so I will add more shares to the portfolio on the weakness today.

Stock price has to rise 8.29% for option to double

HOT symbol for Starwood Starwood Hotels & Resorts Worldwide - rumors of possible takeover bid.

MAR - Marriott Marriott International - Great company who have been beaten down by economy.

Both stocks are great long plays. Buy on lows

Rails are going to be a good long term investment the rest of 08. Norfolk is pulling back this week. Watch and buy on the lows.

AAR is a airline services company. With the airlines cutting cost AAR will gain more outsourced business. Check this stock out, do your homework.

UA Under Armour
BID Sotheby’s
JST Jinpan International
MVC MVC Capital

Start a watch list on these four stocks

I bought this at $19.21 weeks ago and wow what a jump.