If mobile broadband continues to grow at its current rate of triple digit percentage, the doubling of current spectrum allocation will not be sufficed.  The mobile broadband network traffic keeps doubling every year; hence the corresponding capacity should augment 30 fold over five years. Though there is an exponential increase in HD broadcast TV channels, the high growth in mobile broadband requires that mobile operators attain access to further additional spectrum, which includes some from broadcast and the rest from other frequency brands. The cellular represents only 4 percent of the overall 7500 MHz apportioned in the UK, majority of which includes defense, satellite, maritime, and aviation use. In the privation of adequate spectrum, the user demand will be truncated through pricing. In 2011, Cisco forecasted a 26-fold increase in global mobile traffic growth between 2010 and 2015. Insufficient spectrum availability is a major holdup to cellular broadband growth. Ericsson expects only a 10-fold mobile traffic increase between 2011 and 2016. The high scarcity will result in excess spectrum costs that will be passed onto end-users and restrain their consumption. To read full article please visit http://www.fiercewireless.com/europe/story/mallinson-doubling-spectrum-capacity-not-enough/2012-05-22.

Keith Mallinson is founder of WiseHarbor, providing expert commercial advisory to technology and services businesses in wired and wireless telecommunications, media and entertainment serving consumer and professional markets. He is also regular columnist with Wireless Week, FierceWireless Europe, and IP Finance. Prior to forming Wise Harbor Mallinson led Yankee Group’s global Wireless/Mobile research and consulting team as Executive Vice President. He currently forecasts the long-term outlook in mobile operator services, network equipment and devices to 2025.

IBM is showcasing its SmartCloud public cloud to enterprise-class customers to attract them from Amazon Web Services, Hewlett-Packard, Dell and others. IBM has also promised to put its System Z mainframe on the cloud and are expecting a service level agreement of its public cloud from 99.5% availability guarantee that the company offered at launch in April 2011 to a 99.9 % guarantee due to the SmartCloud Enterprise 2.1 release. Tim states, “This might seem like a small difference but actually the difference is between 48 hours downtime in a year to just less than 9 hours. This could be a huge for company depending on the infrastructure they use to run their business.” IBM says SmartCloud will be rolled out to the customers in the United States and the United Kingdom later this year. Currently there are over one million users running applications on the SmartCloud processing with 4.5 million transactions per day. To read the whole article please visit http://www.theregister.co.uk/2012/05/21/ibm_smartcloud_enterprise_plus/.

Tim Morgan is the Systems Editor of the UK based Register and is President and Editor in Chief of IT Jungle. He has been keeping a keen eye on the midrange system and server markets for 15 years, and was one of the founding editors of The Four Hundred, the industry’s first subscription-based monthly newsletter devoted exclusively to the IBM AS/400 minicomputer, established in 1989. For the past decade, Prickett Morgan has also performed in-depth market and technical studies on behalf of computer hardware and software vendors that helped them bring their products to the AS/400 market or move them beyond the IBM midrange into the computer market at large.

Nvidia recently launched the first graphics processing unit (GPU) designed for the cloud called the Kepler. The whole concept behind these GPU’s is to serve up a desktop experience from the cloud to any device that uses it (tablets, smartphones, iPods, etc). Therefore, no matter what device you are using you will be able to deliver games, applications, utilities, and media as long as there is decent bandwith. This is why vendors who are server providers such as HP, Dell, Cisco, and IBM will all have a product on the market shortly. Uniques advantages of the Kepler include gaming from any device and using Windows on an iPad among many others. These transformational processors will usher in a new age of computing that will make it irrelevant what kind of screen you connect with. To read the full article please visit http://www.digitaltrends.com/computing/how-nvidias-kepler-chips-could-end-pcs-and-tablets-as-we-know-them/.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward looking emerging technology advisory firm. He specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events.

The Walmart Express small store initiative has been a big bet for the company and they have been rolling them out slower than expected as a test market. The concept was designed to give Walmart the ability to reach consumers in large areas where it previously didn’t have a presence while being an alternative to dollar stores and limited assortment grocers such as Aldi. The company’s recent financial results have shown that they are exceeding expectations as U.S. same-store sales increased 2.6 % and store traffic rose for the second straight quarter. Dick states, “When Walmart is satisfied that its pilot that is ready to roll out nationally, there is no doubt that it can move fast. There is still plenty of real estate out there, including takeover space available at the right price. The key is to make sure that the merchandise message inside Walmart Express is clearly defined: A knee-jerk response to dollar stores or chains like Aldi is probably not what’s called for.” To read the full article please visit http://www.retailwire.com/blog-post/a30a41f5-2be3-409e-8c19-26d9416e4731/walmart-goes-slow-on-small-formats.

Richard Seesel is the Manager and owner of Retailing In Focus, LLC. He was most recently a Senior Vice President and Divisional Merchandise Manager at Kohl’s Department Stores. Dick is proud to have helped Kohl’s grow from 18 stores to a national retail powerhouse, during an era of change and consolidation throughout the retail industry.

JCP hosted a significant gathering of the retail community to review it’s first quarter earnings and progress to date on Ron Johnson’s efforts to reinvigorate the troubled retailer.  Vendors were well represented, as they are rightly focused on supporting the company rather than lose yet another major department store chain in the market.

RJ was confident and clear in his convictions about the strategy and forthcoming about the complexities and surprises.  A positive was to hear the transformation so far has shattered expectations, and that the team there is energized to make things happen.  His statement was backed up with statistics such as being 47% complete on the process of changing the merchandise assortment, and so far achieving $600 million in annualized expense savings. 

The progress on changing assortments was evidenced with the announcement of a number of new vendors and brands, along with strategies to upgrade their existing private label brands.  Introducing popular branded product at prices affordable to current and future JCP customers is essential to turning around a dismal sales trend. 

Eliminating coupons and promotions was significantly behind the 18% drop in comparable store sales for the quarter.  That trend will be with the company for some time as their competition promotes heavily going into Memorial Day and July 4th, then back-to-school and fourth quarter holiday. The goal of changing consumer behavior towards price promotions – they love it and respond to it, will not happen without excitement around new branded product.   Vendors are responding favorably for the reasons noted, but will no doubt feel pressure from the competition if they offer comparable product to JCP at lower ticketed retails.  Watch for more exclusive lines being announced, both at JCP and the competition, along with brands being dropped from the likes of Macy’s in response to ticketed retail confusion with JCP. 

First quarter earnings took a big hit for the inventory impact of changing assortments.   Having a crystal ball view into the impact of the remaining assortment changes isn’t an option, so expect more in the future as they continue to edit.  It appears the company is trying to minimize the impact of clearing non-go-forward merchandise, it cannibalizes new / full price sales, by selling that product outside it’s stores.  That may work as long as there’s sufficient demand at the right price in the secondary / jobber markets.  As more NGF is created, the demand may turn and JCP may be forced to clear the goods in stores.  

Comp sales will continue to be negatively impacted during the ramp-up period needed to establish new brands and everyday pricing credibility with customers. That timeframe is unknown, though obviously the shorter the better for JCP.  Their ability to execute across the organization will drive that timeline.  Setting the merchandise plan and getting the allocations right is complicated, and an ongoing challenge even for the best retailers – look at the investment in localized assortment planning at Macy’s.  Add to that the operational challenge of coordinating selling floor moves, construction of vendor shops, fixture and signing changes, and retraining the sales force to name a few. 

The company committed to exceed the $900M in operating expense savings previously promised.  Achieving the $600M on an annualized basis this early is an accomplishment, and they deserve kudos for jumping on the opportunity. The changes made to reduce the number of buying teams, eliminate levels of store management and sales commission are all on target with the goal of simplifying the business.  Watch for an overhaul in store training and compensation strategies for the management teams, along with the metrics to measure the quality of the customer experience.  The company stated they benchmark unfavorably on a number of expense metrics.  Sharing those comparisons in the future as they make structural changes to close the gap would be a smart move by the company.

The additional expense savings most likely are partly driven by the opportunities described on the systems front.  The “dream vision for technology” is something to look for across the supply side and selling floor.  The technology background the new leadership brings sets the stage for exciting changes ahead.  The reality check is it’s expensive to develop and swap out existing applications and install new hardware.

The company has a clear vision of the transformational change they’re pursuing.  They have the leadership with proven accomplishments, though not in the department store sector.  They have the vendor community in their corner.  Can they pull it off, and will the cash flow hold up along the way.

A Boston-based portfolio manager recommended Lakes Enertainment (NASDAQ: LACO, $2.73) at our idea forum two weeks ago.  Lakes has 6 different assets, but is currently trading at the value of just one.  The company owns an 8% economic interest in Horseshoe Casino Cleveland, which opened on May 14th.  This $350 million gaming establishment is one of four casinos approved in Ohio by the state referendum.  Horseshoe and a casino in Cincinnati, scheduled to open in 2013, are both owned by Rock Ohio Caesars, a joint venture between Rock Gaming, Dan Gibert’s project who also owns Cleveland Cavaliers and Quicken Loans, and Caesars Entertainment.  In addition to its stakes in two Ohio casinos, Lakes also managed Red Hawk Casino in Northern California and is about to get approval for a $60 million project in Maryland.  These four assets are worth at least $4-6 on a sum of parts basis, without putting any value on $35 million in notes receivable or future development projects.  The company has $39 million in cash and no debt.

Kelly Services (NASDAQ: KELYA, $12.78) was presented at our recent idea forum in Boston.   The company had a solid year in 2011 and exceeded earnings expectations in Q1.  Management is optimistic about the long-term outlook, given trends in the labor force that play to company’s strengths, but is cautiously positive about near-term.  The company is very focused on improving its profitability.  The stock is currently trading at a significant discount to peers and on the absolute basis.  At less than 8x 2013 earnings and trading well below tangible book, the downside should be limited.  The long-term earnings power is $1.80/share.  Based on 14x multiple, the level it has traded at historically, the upside could be close to 100%.