Real Story: Telecom Insights

Chip inventories are in a "transition period" but still remain a bit elevated, Bob Faulkner, author TheStreet.com Telecom Connection, told Aaron Task on Monday's Real Story podcast.

"As more [firms] work through inventories, they'll start talking about positive surprises and better orders."

Faulkner says we're at the leading edge of that cycle and believes Qualcomm (QCOM Quote) and Texas Instruments (TXN Quote), the "weapons suppliers," are best positioned to profit when the cycle turns.

Rather than a sign of problems ahead, Monday's warning from Agere Systems (AGR Quote) was probably a function of its customer Seagate (STX Quote) trying to rationalize its inventories as it absorbs Maxtor, which it acquired last year, Faulkner said.

The telecom expert also weighed in on the $6 billion supply contract Verizon Wireless (VZ Quote) signed with Alcatel-Lucent (ALU Quote), saying the companies' "shared DNA" makes it hard for competitors to make inroads.

In the remainder of the podcast, Task addressed the day's other big corporate news, including the stent battle between Boston Scientific (BSX Quote) and Abbot Labs (ABT Quote), as well as the latest dramatic moves for biotech stocks such as Alexza Pharmaceuticals (ALXA Quote) and CV Therapeutics (CVTX Quote).

The "Real Story" host also discussed Monday's macroeconomic news, including the weaker-than-expected new-homes sales data and the latest moves in crude oil prices, calling the market's comeback from related early weakness a bullish sign.

Click here to listen to the entire podcast.