3 Tech Stocks for an Obama Administration

How will President-elect Obama affect your portfolio? Keep reading our special series for the lowdown.

As our soon-to-be leader of the free world, President-elect Obama will have a profound effect on the digital world and the tech investors who hope to profit from it.

How will he support innovation? Limit it? Here's an at-a-glance view of his answers to key policy questions, excerpted from an excellent article written by Declan McCullagh of News.com:

Policy Question

For

Against

Broadband subsidies for rural areas?

x

 

Net neutrality legislation?

x

 

Limited copying of digital content for personal use?

x

 

Protection of personal identification information?

x

 

Additional regulation of social-networking sites?

 

x

Data retention requirements for ISPs?

 

x

Fund a research and development tax credit?

x

 

Permanent moratorium on Internet access taxes?

x

 

Increase limits on H-1B visas?

x*

 

*But only a temporary increase, in lieu of comprehensive immigration reform.Source: News.com.

Unrestricted access for all
Not only does Obama favor net neutrality -- he opposes any idea that would favor one site over another -- but he's also a huge supporter of universal broadband access. "As a country, we have ensured that every American has access to telephone service and electricity, regardless of economic status, and I will do likewise for broadband Internet access," he has said.

Obama, in other words, sees Web access as a right, like radio or TV signals. And he sees wireless spectrum -- the same sort of wireless spectrum that Google (Nasdaq: GOOG  ) was chasing not long ago -- as key to universal access. That's likely good news for WiMAX technology and its backers, including Clearwire (Nasdaq: CLWR  ) and Sprint Nextel (NYSE: S  ) .

Akamai (Nasdaq: AKAM  ) , too, would benefit by having more content to deliver. CEO Paul Sagan long ago described how broadband penetration would create demand for his company's services.

Who's that knocking on my digital door?
Privacy is the issue in a Web world built on connectedness. Obama sympathizes. "We need a privacy policy for the modern economy, including information collected on the Internet and offline, as well as across industries ... I will work with leading legislators, privacy advocates, and business leaders to strengthen both voluntary and legally required privacy protections," Obama wrote in his response to News.com.

Notice the language. Obama appears to prefer opt-in policies like this one, but he also wants protection for consumers whose information is used unwillingly or, as in the case of Facebook's failed Beacon platform, inappropriately.

Interestingly, Obama refuses to single out social-networking sites or disruptive virtual worlders such as Linden Lab in the privacy debate. It's a touchy subject; sex offenders have used social sites to lure victims. But Obama prefers a comprehensive policy. "Social-networking sites are just one way sex offenders seek out victims, and I would not support targeting them specifically, but I would be open to any legislation that would make it easier for law enforcement to bring sex offenders to justice."

Reshaping Silicon Valley
For years, two things shaped Silicon Valley:

  1. Heavy stock-option grants.
  2. A mostly open-door immigration policy.

As far as I can tell, Obama hasn't said much about options, but his views on H-1B visas are a cause for concern among some in the Valley, The Associated Press reported this week. Obama would prefer not to import tech talent. Rather, he's for training more African-Americans, Hispanics, and Native Americans to fill science and engineering jobs.

"Until we have achieved that, I will support a temporary increase in the H-1B visa program as a stopgap measure until we can reform our immigration system comprehensively," Obama told News.com.

Many of the Valley's top firms depend on immigrants. Google, for example, recently had 210 of its 300 H-1B applications approved. The U.S. Citizenship and Immigration Services agency has received 163,000 applications for 85,000 open visas, Computerworld reports. Often, these visas are for jobs at top tech firms -- Oracle (Nasdaq: ORCL  ) and Cisco (Nasdaq: CSCO  ) , for example.

Drum roll, please ...
So, which tech stocks will profit from an Obama administration? I've got three choices:

Google, because any policy that increases access also increases content. More content means more opportunities to place ads and, thereby, more revenue.

Akamai, because a broadband world is one in which Akamai's enhanced services matter more than the speed at which content can be delivered, thereby reducing the threat from plain-vanilla CDN services like BitGravity.

Clearwire, because it's closest to a national rollout of wireless broadband and, with tons of debt, is a perfect candidate for federal aid.

Research In Motion (Nasdaq: RIMM  ) could also get the nod here, because Obama told News.com that the BlackBerry is his favorite gadget. That's fine for a senator, sir. But you're the president-elect now. Isn't it time for an iPhone?

Fool contributor Tim Beyers was a geek before being a geek was cool. Nice timing, eh? Tim is an analyst for the Fool's tech-tastic Rule Breakers service, which features Akamai and Google on its scorecard. Get access to all of Tim's Foolish writings here.

Tim had stock positions in Apple, Google, and Oracle, and options positions in Apple and Google at the time of publication. Sprint Nextel is an Inside Value pick. The Motley Fool's disclosure policy cast a vote for our chief rebel, David Gardner.


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  • Report this Comment On November 11, 2008, at 11:20 AM, Internettech wrote:

    Today Novermber 11, Cisco introduces a killer edge router to replace any and all "slowdown" at the edge. The ASR 9000 is built to handle 400 Gbit/s of traffic per slot. Yes that's per slot (four 100 gigabit interfaces per slot). There is absolutely no need for Akamai content management when a standard edge router can handle that kind of speed. This likely means that the CRS-1 which was the fastest router Cisco made until today at 40Gbits/s per slot with a 92 terabit/s(=92,000Gbits/s) will likely get a speed bump per slot in the core of the ISP network early next year.

    http://www.lightreading.com/document.asp?doc_id=167716&p...

    It looks like Akamai would be smart to immediately shift away from website content management and their aging DNS architecture and aging colocated content servers and just do advertisement delivery/managment in the future (building on their recent purchase).

    If you add this announcement to Amazon's, Microsoft's, ATT's, Level 3s, and Google's announced cloud computing/hosting build outs, it doesn't bode well for Akamai's business model when the Internet has this level of cloud hardware so close to the network edge.

    As result of this Cisco product introduction as well as other new products from other vendors, I believe Akamai stock is headed lower to around 6 over the next six months where it will stay until this market recovers.

    And would Akamai please do a better job of managing their inverse addressing in their distributed DNS servers, it's really a pain to have dig out the IPs when their broken servers hang and have to look up the IP number at Arin.net for Cyberdefense.

    To get the carrier build out perspective see:

    http://newsreleases.sprint.com/phoenix.zhtml?c=127149&p=...

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