U.S. Cellular (USM) has recently launched Google (GOOG) Android-based mobile tablet — HTC Flyer. The device is available for $399.99, after a $100 rebate, with a purchase of a 5 GB data plan. It comes for $599.99 after the same rebate, with a 200 MB data plan.
Designed to look sleek, the HTC Flyer features a 1.5 Ghz Snapdragon processor and 32 GB of internal memory. It also has dual camera and an optional HTC Scribe, a pen to highlight text on the screen.
The launch of the device is in concurrence with the plan to launch three HTC devices announced last month. It reflects the company’s focus on the “Belief Project”, which offers a compelling high-value portfolio of products and services. Currently, the company has approximately 2.3 million customers under the Belief plan. Considering the growing popularity of the plan, we see U.S. Cellular raking in $4,000–$4,100 million service revenue and $210–$285 million operating income in 2011.
Further, the new devices would strengthen U.S. Cellular’s current smartphone portfolio. Its smartphone gallery comprises several Android-based phones, such as HTC Merge, LG Genesis, Samsung Acclaim, Samsung Mesmerize, Samsung Galaxy Tab, HTC Desire, LG Apex and LG Optimus U. In addition, U.S. Cellular also offers Research in Motion Ltd. (RIMM) and Microsoft Corp. (MSFT) powered mobile phones such as BlackBerry Torch 9850, Blackberry Curve 9330, Blackberry Bold, and Samsung Exec.
We believe these handsets would lead to higher revenue figures and remain the key drivers of the company’s data revenues going forward. U.S. Cellular continues to expand its smartphone and Tablet arena and plans to launch its first 4G enabled smartphone packed with the Android 2.3 operating system in 2011 and continue to roll out through 2012.
We are currently maintaining our long-term Neutral recommendation on U.S. Cellular. The stock retains the Zacks #2 (Buy) Rank for the short term.
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