Wireless and communication stocks can include anything from communications infrastructure to the company that makes handsets. Together, a plethora of companies compose the wireless and communications industry. A few examples of such corporations are cell phone chip makers, satellite engineering firms, cable manufacturers and wireless service providers. Three well established and large capitalization wireless communications companies are listed below.

Verizon Wireless (VZ): Verizon wireless is a wireless telecommunications provider that merged with MCI in early 2006. Verizon also provides cable communication services and has a wide network distribution throughout the United States.

Sprint Nextel (S): Sprint-Nextel is primarily is wireless communications service provider and merged with Nextel in 2005 in an effort to gain increased market share, a wider array of wireless service and products.

Qualcomm(QCOM): Qualcomm is a wireless telecommunications software and hardware provider founded in 1985. This company produces devices such as computer chips, software applications and integrated communications technology that enable service providers to position themselves more competitively.

Due to the vastness of the wireless communications industry in terms of product and service life-cycle there are life-cycle specific advantages to each branch of the industry. In the case of wireless service providers some of those benefits are as follows.

• Utility Status: Since some wireless telecommunication firms also provide utility services they may be more reliable investments than companies that do not have this capacity.
• Dividends: Some utility companies including wireless service providers offer dividends on a consistent basis allowing shareholders to receive cash payments for simply owning the stock.
• Vertical Integration: Wireless communications companies may be able to employ a strategic technique called vertical integration. Vertically integrated companies are sometimes better able to retain profits and increase profit margin. Vertical integration means how much of the creation to sale, service and product process is managed by the company itself.
• Innovation: Companies involved in the wireless and communications industry obtain revenue from sales of equipment, and services. When innovation occurs in the telecom industry, increased sales due to commercialization of improved products and/or services yield a potential advantage over competition.

Just as there are potential benefits in the wireless and communications industry, there are also potential pitfalls. A few of those pitfalls, especially in regard to wireless service providers are illustrated below.

• Product/Service Competition: Companies that fall under the category of wireless and communications are vulnerable to price and product competition. For example, company A has laid down an infrastructure of fiber optic cable that allows it to provide a multitude of services. Company B however, has not, and is still using an older more antiquated communications infrastructure. This difference could lead to company B's dramatically losing customers, market share and profit margin.
• Price Competition: If competitors are able to out price each other and still increase profit margin they have gained a significant edge over the competition which must either lower prices to compete or lose market share. What's more, if a competitor's new product is so unique and dazzling it could bring commercial disfavor to its competitor's products and market share.
• Non-Utility Status: Wireless and communications stocks that are unable to offer utility services in addition to premium communication's services are potentially more subject to volatility than communications stocks offering utility type services.

There are many formulas, indicators and techniques that can be used when analyzing wireless and telecommunications firm's business performance. These metrics assist investors in making more reliable investment decisions. Two such metrics are return on assets and the cash conversion cycle.

• Return on Assets (ROA): The 'return on assets' equation is an indicator of profitability. Since large companies often operate with heavy expenses, comparing the ROA of several communications companies can be an indicator of which companies are managing their companies more efficiently and with a greater percentage of sales for each dollar of assets. The ROA equation is equal to profit margin multiplied by total asset turnover. Where profit margin=net income/sales and total asset turnover=sales/total assets.
• Cash Conversion Cycle: The cash conversion cycle is measured in days and is a measurement of how quickly a company can turn accounts receivable for services rendered and/or products sold into cash. The shorter the cash conversion cycle, the more efficient a company is in terms of collecting debt, the less the company pays in interest on existing debt used in financing operations, and the more reliable it's customer base. The cash conversion cycle is a good metric to ascertain operational functionality and certain aspects of cash flow.