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AT&T, Comcast Election Watch: Trump To Favor National Champions?

Republican presidential front-runner Donald Trump could favor large-scale telecom M&A to build national champions, while Democratic front-runner Hillary Clinton would likely nominate a new FCC chairman with views similar to current FCC Chairman Tom Wheeler, who promotes competition. So says RBC Capital in an outlook report on the presidential election. Republican primaries in five states on Tuesday, including Florida and Ohio, are critical for Trump, who leads in delegates vs. Texas Sen. Ted Cruz, Ohio Gov. John Kasich and Florida Sen. Marco Rubio. On the Democratic side, Clinton has been unable to put away Vermont Sen. Bernie Sanders. Under Wheeler, the Federal Communications Commission thwarted Comcast ’s ( CMCSA ) acquisition of Time Warner Cable ( TWC ), and snuffed out merger talks between Sprint ( S ) and T-Mobile US ( TMUS ). The FCC, though, did allow  AT&T ( T ) to buy DirecTV Group. Many of Wheeler’s regulatory policy changes, meanwhile, have targeted Internet service providers, such as Comcast, AT&T and Verizon Communications ( VZ ). Jonathan Atkin, an RBC Capital analyst, says that based on his research, Trump is a telecom wild card. “Trump, on this topic, is considerably less predictable and could be an advocate of large national champions to enhance competitiveness vs. foreign countries, and hence, in certain cases, more accepting of consolidation,” Atkin said in the research report. “Cruz’s, Rubio’s or Kasich’s stance on antitrust could likely be similar to those of Bush or Reagan,” Atkin added. “This does not mean that every merger would be supported, but it would be 10%-20% easier to get horizontal deals done under a Republican vs. Democratic administration, in the view of one regulatory contact,” Atkin wrote. In a new Democratic administration, Atkin speculates that Comcast could buy a wireless company but probably not more cable TV assets. Within the telecom industry, there’s a perception Wheeler has favored Silicon Valley and Internet companies such as Apple ( AAPL ), Alphabet ’s ( GOOGL ) Google and Facebook ( FB ) ( IBD ) vs. Internet service providers. Broadband service providers are currently challenging Wheeler’s “net neutrality” rules in federal court. Atkin’s view is that Sanders’ election would be the worst outcome for the telecom companies. “Clinton could end up bringing in as FCC chair someone who is similarly aligned as Mr. Wheeler,” Atkin said. “Sanders could select as FCC chair someone who is even possibly more consumer-oriented than the current chair, and may possibly attempt to rate regulate broadband.”

Macom Leapfrogs Apple-Supplying Chip Rivals With Lasers, Radar

FAA and NOAA demand for weather applications will drive approximately $500 million in additional annual revenue over the upcoming five years for IBD Leaderboard stock  Macom Technology Solutions ( MTSI ), a Needham analyst said Friday following the chipmaker’s “upbeat” analyst day. Macom stock rose 5.8% on the stock market today , to 43.79 — nearing its all-time high of 44.15, achieved Monday — and extended 5.7% from a 41.42 buy point. IBD’s 41-company Electronics-Semiconductor Manufacturing industry group jumped 2.3% Friday, spurred by Macom. Shares of chip rivals Analog Devices ( ADI ),  Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ) — all Apple ( AAPL ) suppliers — rose 1.2%, 2.2% and 3.5%, respectively. Needham analyst N. Quinn Bolton reiterated his buy rating and 46 price target on Macom stock. Barclays boosted its price target on Macom stock to 44 from 41 and maintained an overweight rating. Macom Ogles Vast Growth Optical, gallium nitride (GaN) and active antenna radar could each double Macom’s approximately $500 million revenue over the next three to five years, “potentially driving up to $2 billion of annual revenue by 2020,” Bolton wrote in a research report. “While management was clear the team may not bat 1,000 and that timing of specific product ramps was difficult to accurately forecast, management has clearly set an objective to become a much larger company,” he wrote. Macom’s $2.3 billion market cap puts it distantly behind industry leader Intel ( INTC ) and Intel’s $150 billion market cap. Unlike its Apple-supplying rivals, Macom’s chips aren’t focused on consumer products but instead are used in commercial and industrial applications like cellphone base stations, military radar and lasers. Macom also is developing GaN-on-silicon chips, squaring off with privately held Transform, Infineon Technologies and Efficient Power Conversion (EPC). GaN transistors can turn on and off faster than silicon, can withstand a higher voltage and are markedly smaller. Could Gallium Nitride Take On Silicon? Last year, EPC figured out how to make them cheaper, too, EPC CEO Alex Lidow told IBD in February. Lidow used to head up International Rectifier, which Infineon acquired in 2014. Companies like EPC aim to use GaN in electronic components such as transistors. EPC grows a thin layer of gallium nitride on silicon wafers and, like Macom, it uses the chips in cellphone base stations. “GaN is being used in base stations, going up in Google balloons and Facebook ( FB ) drones,” Lidow said. Other applications include a swallowable colonoscopy pill, autonomous cars ( Alphabet ( GOOGL ) and Tesla Motors ( TSLA ) are among the competitors) and wireless charging. Lidow estimates a $370 billion total addressable market — $30 billion in power, $40 billion in analog and $300 billion in digital. Macom is trying to grab some of it. The company has been in talks with smartphone makers Huawei, Nokia ( NOK ) and Ericsson ( ERIC ) for over a year and just recently completed customer validation, Bolton wrote. “If the commercial contract negotiations go well, management believes the company could generate first production revenue for GaN-on-Si (GaN-on-silicon power amplifiers) by year-end 2016,” he wrote. Macom estimates that it can scoop 40%-60% of the base station power amplifier market over the next three to five years. RELATED: 5 Chip Stocks To Watch, Moving Up, With Apple’s Big Event March 21

Amazon Alexa Seen Topping Apple Siri, As Voice Commander

Siri, the virtual assistant Apple ( AAPL ) released nearly five years ago, may be topped by  Amazon.com ( AMZN ) and its own spin on said tech, Alexa, an analyst says. MarketWatch cites analyst James Cakmak of Monness, Crespi & Hardt as saying that Alexa could overtake Apple’s assistant Siri because of its integration with Amazon’s Echo speaker that takes voice commands, and its integration with other home brands. Cakmak sees Alexa increasingly looking headed toward industry-standard position, the report says, especially with the opening of third-party device interoperability. On Jan. 4, Cakmak had  downgraded Amazon from a buy to a neutral rating, citing competitive pressure in 2016. Amazon.com stock was up more than 1%, around 565, in afternoon trading on the stock market today . The company has an IBD Composite Rating of 73, where 99 is the highest. The stock touched a six month low of 474 on Feb. 9, but has since rallied nearly 20% since. Amazon Echo’s Killer App: Alexa Amazon’s Alexa is able to hail rides from Uber, play music, set timers, and manipulate smart devices in homes, such as the Nest thermostat from the Google unit of Alphabet ( GOOGL ), among other functions. On Friday, Capital One Financial ( COF ) announced that it was adding a “skill” — what Amazon calls features — to Alexa, that would let its customers interact with their financial information with voice commands. Capital One said in a statement emailed to reporters that their customers can do things like check their credit card balance, and make payments via Alexa. Several Amazon devices offer Alexa : the original Echo speaker, the smaller Echo Dot with a scaled-down speaker, and the Amazon Tap that requires pressing a button before Alexa can respond to requests. Google and Microsoft ( MSFT ) also offer voice-controlled virtual assistants. Speaker Rival Sonos Slashes Jobs Faced with rising competition from Amazon, Wi-Fi streaming speaker maker Sonos is cutting staff and pivoting to work on voice-controlled features, Bloomberg reported Wednesday. Sonos is a partner to Apple and other music providers. “ We’re fans of what Amazon has done with Alexa and the Echo product line,” Sonos CEO John MacFarlane said in a blog post Wednesday. “Voice recognition isn’t new; today it’s nearly ubiquitous with Siri, OK Google and Cortana. But the Echo found a sweet spot in the home and will impact how we navigate music, weather and many, many other things as developers bring new ideas and more content to the Alexa platform.” He called Alexa/Echo the first product “to really showcase the power of voice control in the home” and said Sonos will “invest what’s required” to bring voice-controlled music experiences into the home and to market “in a wonderful way.”