Zacks Analyst Blog Highlights: SK Telecom, Apple, KT Corp, The Macerich Company and J.C.Penney Company

Mar 09, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, March 9, 2011 /PRNewswire/ -- Analyst Blog features: SK Telecom (NYSE: SKM), Apple Inc. (Nasdaq: AAPL), KT Corp. (NYSE: KT), The Macerich Company (NYSE: MAC) and J.C.Penney Company, Inc. (NYSE: JCP).


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Here are highlights from Tuesday's Analyst Blog:

iPhone Prospects Excite SK Telecom

Starting March 16, South Korean wireless kingpin SK Telecom (NYSE: SKM) will offer Apple Inc.'s (Nasdaq: AAPL) iPhone 4. This will mark an end to the exclusivity enjoyed by its major rival, KT Corp. (NYSE: KT) since late 2009.

This move will allow SK Telecom to make up for lost revenues and profits as the anticipated strong adoption of smartphones will boost its growth in the wireless market. Smartphones are gaining popularity by the day, in turn driving demand for wireless data.

SK Telecom is pursuing various business opportunities in advanced technology given limited growth prospects in the highly matured domestic wireless market. The company continues to invest in new areas of growth such as wireless Wi-Finetworks and data femtocell, 3G network expansion, introduction of 4G Long Term Evolution (LTE) network, smartphone service and mobile software business. These are expected to boost long-term growth for the company.

SK Telecom is expected to increase Wi-Fi zones to 62,000 by deploying 45,000 more Wi-Fi zones by the end of 2011, as well as expand the 1,000 femtocells deployed last year to 10,000 femtocells. The company will offer data modems for the first time in Korea in July 2011 and plans to roll out commercial LTE services in Seoul in the third quarter of 2011. The launch of diverse LTE devices including smartphones and tablet PCs is also underway. These efforts should augur well for wireless revenue growth in the upcoming quarters.

Moreover, telecom carriers in Korea are very enthusiastic about entering  the cloud computing market in an attempt to tap the growing demand for software, platform and data storage in service. SK Telecom is set to spearhead this market though its differentiated cloud services as well as customized and specialized solutions.

While the company's aggressive smartphone strategy will open up opportunities in wireless data, associated promotional expenses and heavy handset subsidies may drag its earnings in the near future. Hence, we are currently maintaining our long-term Neutral recommendation on SK Telecom.

Despite being the leader in the domestic wireless market, SK Telecom is facing greater challenges in retaining its market position. We remain cautious on tariff reductions, which are hurting revenues, intense competition and austere regulation by the Korean ministry. Hence, for the short term (1–3 months), Zacks recommends a Sell rating with a Zacks #4 Rank.

Macerich Buys Desert Sky

The Macerich Company (NYSE: MAC), a real estate investment trust recently purchased the remaining 50.0% ownership of the Desert Sky mall in Phoenix from J.C.Penney Company, Inc. (NYSE: JCP).

Macerich bought the remaining half of the Desert Sky mall for $ 27.6 million assuming a portion of the loan on the property. Concurrent with the acquisition, the $51.5 million loan was paid off.

Desert Sky is a shopping center spanning 900,000 square feet featuring a unique merchandise mix, mainly focusing on the Latino community. With the recently announced increased stake in Kierland Commons and this transaction, Macerich is strengthening its position in Arizona considering long-term growth opportunities.

In December 2010, Macerich launched a new concept in the former Mervyns department store at Desert sky converting it into a new Latin market place, which consists of rooms and spaces for more than 200 tenants to expand its efforts and connect with Latin American businesses and consumers. The demand is increasing for such a concept which could groom retailers to rent more space.

With the acquisition of the mall, Macerich continues to innovate itself with a customized merchandising strategy thereby making itself more attractive to the Latin American consumers.

Macerich is one of the largest operators of regional and community shopping centers in the U.S. with assets in high barrier-to-entry markets that have fared relatively well despite a challenging market. Macerich currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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