No matter how bad things get, folks are still shelling out big bucks for iPhones and Androids. Crazy? Maybe. An opportunity? You bet!

Once again, I must start this column with a confession: The entire recession just might be my fault.

At least that’s the impression I get from friends, family and co-workers. Oh, and also from my telephone service provider.

You see, we refuse to get new cell phones.

Oh the Shame!

Please understand: We didn’t even have cell phones until my wife was pregnant with our first daughter and became frantically concerned with keeping in touch with me, no matter where I was. I figured, “What the heck. I’m either home, on my way to work, at work, or on my way home. And labor lasts for at least 12 hours. I’ll probably make it for at least the last bit.”

Yeah, yeah, I know. Not such a bright thing to tell one’s spouse when they are in a normal frame of mind. And just plain stupid when she’s pregnant. We had our phones by the close of business that day.

They were pretty cool – you could store people’s phone numbers right inside them, and they had three or four different chimey little synthesized ringing sounds you could choose from. Best part was, if pressed, you could kill a mugger with one, because I think they weighed about 5 lbs.

So They Catch Fire: What’s Your Point?

We were really sad the day five years ago when we had to give them up. (Something about the batteries catching fire in ones pocket.) We really had to search to find phones that were just about as simple and easy to use. But we managed to find a little clamshell model that was so “down market,” they paid US$50 to get us to buy it (via one of those odd rebate deals).

Now the “new” phones are indeed five years old, and therefore supposedly completely dysfunctional compared to these brand-new text-ready, net-ready, miniature pocket computers.

Actually, I know our old phones can text, because the phone company keeps sending me little messages begging me to get a new one. I also get e-mails, letters, and fancy brochures touting the wonders of being able to search the Internet and be in constant contact with my friends, all while driving my car. The new models even come with GPS, which is probably very handy for when you get lost because you are playing games on your cell phone instead of watching for your highway exit.

My Scarlet Letter

My older daughter tells me that she is embarrassed every time we take out our phones. I asked her if it’s like some kind of “Scarlet L” for “loser.” “You know, like Hester Prynn?” She just stared at me.

Guess who’s getting some Hawthorne for the holidays?

And no, it won’t be the digital “Kindle” edition, or any other such foolishness. It’ll be a hardcover edition, even if I have to haunt every used bookstore in town to find a nice one.

Of course, if I do that, I’ll probably have to buy her a new cell phone too (whether I want one or not). Otherwise, I’ll just end up shelling out even more money to a shrink when she’s older. Besides, I’m told that it’s my patriotic duty. Someone’s got to step up and end this recession.

People Are Actually Buying These Things

With that ever-so-slightly mandatory purchase in mind, I held my nose and dived into the “cell phone space” for a bit. (I am, after all, a professional researcher, right?)

The first thing I read truly amazed me. Here we are mired butt-deep in recession (and don’t let the wise guys tell you otherwise), and Apple (AAPL:NasdaqGS) has actually managed to pass Nokia (NOK:NYSE) when it comes to making a profit off handsets.

IPhone sales for the third quarter came in around $1.6 billion, while Nokia only managed to drag in about $1.1 billion. Apparently, the former 800lb. gorilla of this biz is losing market share all over the place. Even Motorola (MOT:NYSE)’s new offering is drubbing it.

MOT Rises From the Dead

Motorola hasn’t been a player in this “space” (that’s how the geeks all say it in the reports I read – I’m trying to be cool here, so don’t blow my cover) for years now, ever since the hinges on their sleek Razr phones all cracked in half. But their new “Droid” appears to be tearing it up, selling some 100,000 units in its very first weekend.

My wife and I saw the initial tease ads for the Droid. You know, the ones where a flight of stealth bombers shoot mechanical-looking pods at farmers and fishermen. When they opened up to reveal little robot eyes, my wife said: “Why would anyone want to buy that. They’re creepy!”

Still, it looks like the Droid will be giving Apple a run for its money as “this year’s hot toy.” (Come on, we all know these are toys, right?) Still, after the whole Razr fiasco, I am loath to recommend MOT shares. My hunch is that Motorola will still find a way to shoot itself in the foot.

Their Screwup – Your Opportunity

And in fact, I may have uncovered their latest screwup. “Droids” as packaged do not come with enough SanDisk (SNDK:NasdaqGS) flash memory to actually function as promised. So you have to go out and buy another 90 bucks’ worth of SanDisk memory, if you actually want to have any fun with the little monster.

Come to think of it, they got me the exact same way when I bought my wife a new camera. I had to buy more SanDisk memory if she wanted to keep more than five pictures at a time in the camera. SanDisk also has the same trick working with many of the miniature video cameras, MP3 players, and even a couple of those hot new netbooks. It’s like these things have replaced batteries as the big add-on sale.

So that’s your play today for Christmas this year: I looked at the chart for SNDK, and it looks like it could manage some 40%-80% in the relatively near future. Shares yielded up a clear buy signal last spring, and are now ramping up quite smoothly. There is even an outside chance at a double or better, but that would involve incurring a tad more risk than I think is prudent in this rather dotty market.

In all fairness, I must confess that I have actually shown this chart to my WaveStrength Options Weekly readers, as well as a fairly interesting value argument (provided by my partner Bryan Bottarelli), suggesting that they purchase options that could gain as much as 196% by the time the dust settles and the holiday trash is out at the curb.

Other Related Topics: Adam Lass , Consumer Spending , Retail Industry , Telecommunication , WaveStrength Options Weekly

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