I'm starting to love this Obama administration because it keeps the money flowing right to certain industries. In this case his stimulus package now has an ambitious goal of putting every US child on the Internet and wire every hospital.
"It is unacceptable that the United States ranks 15th in the world in broadband adoption," President-elect Obama said in the address. "Here, in the country that invented the internet, every child should have the chance to get online, and they'll get that chance when I’m President -- because that’s how we'll strengthen America’s competitiveness in the world....[and] the economic recovery plan I’m proposing will help modernize our health care system -- and that won’t just save jobs, it will save lives."
I think Cisco (CSCO), Juniper (JNPR), and Ciena (CIEN) executives need to buy Obama a big fruit basket because he just made their next few years. Business spending in networking equipment has just dropped off the table only to be potentially replaced by taxpayer spending. I wonder how much of this free cash will go just to networking equipment (the total stimulus is rumored to be $500 billion) and who will get the majority of the contracts? It could be a piecemeal thing with some companies getting some states while others handling other states.
Another big winner might by EMC corp. (EMC) who is the top player in network storage. Even though the stock has been recently downgraded to Sell due to the near term weakness in the enterprise I can see them as a long term player. I mean all those kids churning out all those reports, tests, and email will have to store that stuff someplace. If it is stored on the NAS run by the school or on the Web then EMC might get some of that cash.
The third big player will be virtualization software companies like VMWare (VMW) who will fill Obama's mandate of energy efficiency. I mean if you can cram like 10 servers on one box with virtualization technology then these schools (and the Federal Government itself) can save billions on their electricity costs. The only problem with VMWare is that Microsoft (MSFT) is hard charging in this market and already has 37% market share.
The best part about these stocks is that almost all of them are really cheap with many trading near multi-year lows. I think the dropoff in business spending might be priced into these stocks (or maybe a little over priced) while any of the "Obama Broadband Money Tree" will not be priced in until the details of the package are ironed out.
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