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The transient collapse of financial markets has become an indelible lesson to many of us. With this we have witnessed that sector diversity is a less secure planning tool in today's increasingly correlated world markets. However, there are some tactics and opportunities that may be appropriate to address the downturns in the telecom industry, should we be greeted with them again. We consider the following:

Necessity for Telecommunications - The need for telecom in both rural and urban areas, and its role in the infrastructure of both developed and developing markets, continues to grow. Wireless infrastructures and/or low-cost integrated IP voice and data wireline networks are necessities. In fact, most global subscribers will not give up their wireless phones and services that easily, although upgrades to advanced (high-end) handsets/offerings may be sensitive to overall consumer/business budgets. This is accompanied by telecom carriers' continued quest for operational flexibility and streamlining

International Diversification - While country diversification offers only limited protection in the current highly-correlated world equity markets, it offers hedging capabilities from local economic weakness and associated currency exchange differentials. Therefore, a significant allocation of foreign telecom companies would be appropriate as part of a technology-focused portfolio

Balance Sheet Positions - In our view, companies showing significant net cash positions become attractive in volatile markets. It is important to consider balance sheet conditions that may limit the vulnerability of telecom companies in weak economies. This is perhaps at least as important as metrics that track earnings growth but often do not consider overall market declines. With the S&P 500 P/E between 10 and12 times earnings, valuation targets that were provided by analysts based on earnings growth parameters have not been effective in guiding investment recommendations during market tailspins

This leads us to recommend selected net cash positive companies able to weather financial market volatility. Companies that match well with the aforementioned considerations include Qualcomm (Nasdaq: QCOM), China Mobile (NYSE: CHL), Amdocs (NYSE: DOX), and Chunghwa Telecom (NYSE: CHT).