Rockets land Jeremy Lin after Knicks decline to match offer

Kevin Martin doesn’t even remember Jeremy Lin being in training camp with the Houston Rockets last December. Seven months later, Lin is returning to Houston – and he's a lot richer for it.

Jeremy Lin was in the Rockets' training camp last season. (AP)Lin officially rejoined the Rockets Tuesday night after the New York Knicks declined to match the three-year, $25 million offer sheet he signed with Houston. The Rockets waived Lin just before the start of last season, and he went on to become one of sports' biggest stories during a stunning three-week run as the Knicks' starting point guard.

"Everyone knew his story and how it came alive, but it started in Houston with no one really even knowing he was there,” Martin told Yahoo! Sports. "I don’t remember him at all from training camp. It’s going to be kind of funny. Even though he’s been there for us before, it feels like we are getting a new player."

The Knicks declined comment on their decision to match the offer sheet. Rockets general manager Daryl Morey used his Twitter account to welcome Lin: "Welcome to Houston @JLin7! We plan to hang on this time."

"Extremely excited and honored to be a Houston Rocket again!!" Lin tweeted.

Lin became the Knicks' starting point guard after injuries to teammates forced him into the lineup. He led New York to seven straight victories and earned a pair of Sports Illustrated covers and praise from President Obama. His stunning three-week stretch included a 38-point performance against the Los Angeles Lakers and a game-winning 3-pointer at Toronto. The sports world was quickly swept up with "Linsanity," until Lin's season ended with a knee injury.

"Much love and thankfulness to the Knicks and New York for your support this past year … easily the best year of my life," Lin tweeted late Tuesday.

Lin was a restricted free agent, but was strongly expected to return to the Knicks no matter what offer he received. The Rockets creatively put together an offer sheet that includes a $15 million salary in the third year of the contract. New York would have incurred substantial luxury-tax penalties matching the deal because the team owes Carmelo Anthony $24 million, Amar'e Stoudemire $23 million and Tyson Chandler $14.5 million that same season.

[Also: Lakers continue Dwight Howard talks with Magic]

Because of a loophole in the league's rules, Lin would count a little more than $8 million each season on the Rockets' salary cap, but the Knicks have to take the full $15 million hit in the third year. Lin made $762,195 last season.

Lin was also cut by the Golden State Warriors in December. Now, he returns to Houston as a star who will be expected to become the face of Yao Ming's former franchise. Houston ranked 22nd in the NBA in attendance last season, and Lin could help put fans in the seats.

"The fans embraced Yao," Martin said. "They come from the same background. He can be just as exciting as he was in New York. Houston is going to embrace him and expect a lot from him."

[Also: Marc J. Spears: Eric Gordon says he's committed to leading young Hornets]

Basketball-wise, Houston appears to be a better fit than New York for Lin. He averaged 14.6 points and 6.2 assists in 35 games with the Knicks. Most of that success came under coach Mike D’Antoni, who was fired on March 14. Knicks coach Mike Woodson never showed the same confidence in Lin. The Knicks also acquired veteran point guards Jason Kidd and Raymond Felton this offseason.

The Rockets run a lot of pick-and-roll plays that were key to Lin’s success in New York under D’Antoni. Martin believes that Lin will flourish in coach Kevin McHale’s offense.

Jeremy Lin became a global star during his brief run as the Knicks' point guard."I think he can bring what he did in New York to the Rockets," Martin said. "He was great in pick-and-rolls and getting his [big men] involved, kind of like what [Steve] Nash did in Phoenix. When you play alongside a shooting guard who doesn't need to be dribbling to be effective, point guards love playing with big time scorers like that."

The Rockets and Lakers are the current frontrunners to acquire Orlando Magic center Dwight Howard in a trade. Lin can't be traded until Jan. 15 after signing the offer sheet. But Martin, who is in the last year of his contract, could be moved. The Rockets have rid themselves of Kyle Lowry, Luis Scola, Samuel Dalembert and Chase Budinger this summer to acquire the salary-cap space and assets for a potential Howard trade.

"I got here 2½ years ago, and now I’m the longest-tenured Rocket there," Martin said. "We lost some great players over the last month in Kyle and Luis. They were great teammates. Nobody likes to go the rebuilding route, but sometimes it’s needed. And that’s how Daryl Morey feels right now, so you don’t know what the future holds for the Rockets."

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Will Frontier Communications Be Able to Reverse Its Decline? (The Motley Fool)

Frontier Communications (NYSE: FTR - News) reported a steep 30% fall in third-quarter net income, to $20.4 million, mainly due to a decrease in its subscriber base. Let's take a closer, Foolish look at Frontier's problems.

The numbers
The company's total revenues fell by 8%, to $1.3 billion. The reason for this drop was the fall in the number of subscribers across various segments, including business and residential customers, video, switched access, and directory. The drop in net income came from acquisition expenses and reduced operating incomes that were in part offset by lower taxes.

Local and long-distance service revenues fell sequentially and year over year, dropping by 12%, to $605 million, from last year's third quarter. Data and Internet service revenues remained relatively flat from the previous year's quarter at $457 million.

The sky is falling!
The previous year saw Frontier virtually triple its revenues after gaining 4.8 million rural landlines from Verizon (NYSE: VZ - News). This reversed the trend of falling revenues as the company saw its top line jump after the acquisition. But that was just temporary.

The company continues to bleed both customers and revenues mainly because of the increasing obsolescence of landline telephones. A look at sequential and year-over-year data shows this trend. Residential customer count fell sequentially by 2.3%, as well as from the previous year's quarter by 10.2%, to 3.1 million subscribers. Business customers also dropped sequentially by 2.2% and 9.8% from the previous year to 319,379 subscribers. But Frontier has made sure it's able to compensate for this and trim costs as much as possible.

Shaving off unprofitability
Some of the subscriber cuts were due to the company's efforts to reduce the number of customers for the unprofitable FiOS offering that was inadvertently acquired through its Verizon acquisition. FiOS is Verizon's bundled fiber optic offering that combines television, Internet, and telephone services.

So far, the company has been successful in shaving off 9,900 FiOS TV subscribers and 3,100 FiOS Internet subscribers. It has also discouraged customers from ordering the new service, using tactics like raising the installation fee to $500 in Oregon. Having done that, the company wants to shift focus to providing telephone and high-speed Internet services in Oregon and other markets that it got hold of through the Verizon deal. Frontier has also entered into tie-ups with DISH Network (Nasdaq: DISH - News) and DIRECTV (Nasdaq: DTV - News) to resell their satellite TV packages to its customers.

Frontier's efforts seem to be paying off, as it has witnessed the strongest broadband growth rate since the acquisition. The company has been able to bring broadband access to 592,000 new homes and has managed a net addition of 16,200 high-speed Internet subscribers while removing almost $500 million in annual costs.

The Foolish bottom line
With the industrywide trend of shrinking landline subscribers, Frontier has not made the mistake of hard-selling the obsolete technology. Instead, it has shifted focus to promoting its high-speed broadband services in order to retain and grow its precious customer base. This could very well be the solution to the company's falling revenues. However, until Frontier begins to show some improvement at least in terms of top-line numbers, I'd rather stay on the sidelines.

Keki Fatakia does not hold shares in any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Summary Box: Fixed mortgage rates decline again (AP)

RATES FALL AGAIN: Freddie Mac said fixed mortgage rates fell for the fifth straight week this week and hit their lowest levels of the year.

NEW YEARLY LOWS: The average rate on the 30-year loan fell to 4.61 percent from 4.63. That's the lowest level since mid-December. The rate on the 15-year fixed mortgage dipped to 3.80 percent from 3.82 percent, the lowest point since late November.

REFINANCINGS GET BOOST: Low rates spurred more borrowers to apply for a refinance, and that activity is at the highest level since the second week of December.

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ICI: Stock Fund Expenses on the Decline (U.S. News & World Report)

Good news for fund investors: Annual fees for stock funds are falling, according to a new study from the Investment Company Institute (ICI). In 2010, the average expense ratio for stock funds fell two basis points from a year earlier to 0.84 percent, while the average expense ratio for bond funds stayed flat at 0.64 percent.

ICI attributes the decline in stock fund expenses to increasing assets. Net assets in stock funds rose 15 percent in 2010 to $5.4 trillion as of the end of December. "Mutual fund expense ratios often vary inversely with fund assets, as fixed fund expenses are spread across a larger asset base," according to the study. Investors in stock funds paid an average of 0.95 percent in fees in 2010, including sales charges, or loads--down three basis points from 2009.

[See top-rated funds by category ranked by U.S. News Score.]

Net assets in bond funds rose 18 percent last year, to $2.6 trillion, but average fees stayed the same. "While we saw strong growth in the bond market in 2010, those expense ratios stayed flat due to two reasons. Investors moved more assets into in global bond funds, which tend to have higher expense ratios, and into funds that use a unified fee structure, in which fees are a constant percentage of fund assets. Given these trends, it's not surprising to see bond fund expense ratios bucking the typical inverse relationship between asset growth and expenses," says ICI senior economist Sean Collins. Bond fund investors paid an average of 0.72 percent--down one basis point from 2009.

[See Where to Find the Dividends Now.]

Money market fund expenses also dropped last year. Average fees fell by seven basis points to 0.26 percent. Given that yields are meager these days, many funds have waived expense ratios to offer clients a break. In the survey, ICI says fees could move higher once short-term interest rates begin to rise.

Twitter: @benbaden

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