Money Morning subscribers who read our Leaders to Laggards series on the flagging fortunes of Microsoft Corp. (Nasdaq: MSFT), Intel Corp. (Nasdaq: INTC) and Cisco Systems Inc. (Nasdaq: CSCO) weren't surprised by subsequent developments, since we told you exactly what to expect.
The Leaders to Laggards articles described how each company's failure to anticipate changes in their markets undermined their ability to grow revenue. Consequently, their stocks - which many investors rode to massive profits in the 1990s - have languished for the past decade.
Those tribulations have continued since the publication of our series. Microsoft and Cisco have struggled mightily, and as predicted, only Intel has managed to make headway.
Why Intel Is Still a 'Buy'Intel surprised Wall Street with better-than-expected earnings last week - its standout divisions pointing the way to the future growth that for years had eluded the company.
Profits were up 2%, while revenue jumped 21% year-over-year. And gross margins edged up to 64% from 61% in the previous quarter.
Revenue from data centers, which provide the infrastructure for the cloud-computing trend that is now beginning to dominate mobile devices such as tablets and smartphones, was up 15.2% and accounted for nearly 20% of total sales.
Intel sees data centers as a major source of growth. The company expects sales to rise to $10 billion this year and to $20 billion within five years.
An even bigger surprise was the strength in the chipmaker's PC business, which accounted for 64% of Intel's revenue. Sales of the PC division rose 11% despite sluggish growth of about 2.5% in the overall PC market.
"We knew that there would be strength in the servers, but to see double-digit growth in their PC unit is great," Michael Shinnick, a money managerat Wasatch Advisors Inc.,told Bloomberg News.
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Verizon iPhone On the Way – But Not Before Christmas
Apple Inc. (Nasdaq: AAPL) will escalate the war for smartphone dominance in early 2011 by releasing a new version of its iPhone to run on the popular Verizon Wireless (NYSE: VZ) network, the biggest U.S. carrier by subscribers.
However, the phone won't make it out in time for the Christmas season, as many had hoped.
Apple will be ramping up to mass produce the new touchscreen handset by the end of 2010 and release it in the first quarter of 2011, people familiar with the matter told The Wall Street Journal. While the phone would be similar to the iPhone 4 sold by its current carrier, AT&T (NYSE: T), it would be based on an alternative wireless technology used by Verizon, the people said.
The Verizon iPhone will mark the end of AT&T's agreement with Apple that gave the telecommunications giant exclusive rights to market and sell the handset since 2007, when Apple Chief Executive Steve Jobs introduced the original iPhone.
Verizon has been testing its networks and capacity to handle the heavy data load by iPhone users, seeking to avoid the kind of bad publicity that plagued AT&T after booming sales of data-hungry iPhones crippled its network.
Buy, Sell or Hold: With $44 Billion in Cash and a Focus on Shareholder Value, It's Time to Buy Microsoft Corp. (Nasdaq: MSFT)
The last time I recommended Microsoft Corp. (Nasdaq: MSFT), Bill Clinton was in the White House. But it's time to take another look at the "cash-flow-engine" that Bill Gates built - and to explain why Microsoft is a "Buy" in today's stock market.
Microsoft is one of the safest investments in the world, but the software giant's stock price has done essentially nothing for the last 10 years. But the company is still a monopoly, has no debt, and continues to generate a torrent of cash.
In fact, Microsoft now has one of the largest cash hordes in the history of capitalism - more than $44 billion, and growing.
So what's different? What's the catalyst that promises to break this giant out of its somnambular state, to make its shares a "Buy?"
The Bright Future for Cloud Computing is Becoming Much Clearer
The cloud computing industry has yet to fully take off, but for an indication of its potential, look at the players getting involved.
Microsoft Corp. (Nasdaq: MSFT), Hewlett-Packard Co. (NYSE: HPQ), Oracle Corp. (Nasdaq: ORCL), Google Inc. (Nasdaq: GOOG), and Amazon.com Inc. (Nasdaq: AMZN) - the biggest names in the tech sector - are all racing to take the lead in this burgeoning industry.
So what's all of the excitement about?
Buy, Sell or Hold: Despite Challenges, Innovation Will Provide Long-Term Boost to Software Leader Microsoft Corp. (Nasdaq: MSFT)
Thanks to some shrewd maneuvering with its first major software contract in the early 1980s, Microsoft Corp. (Nasdaq: MSFT) built itself into a tech giant and software powerhouse. But the global financial crisis and increasing competition are eroding that longstanding dominance.
There's no doubt the company has made successful strategic decisions for decades.
Founder and Chairman William H. Gates III established Microsoft in 1975 and made it the worldwide leader in software products and services, including operating systems for servers, personal computers and intelligent devices, server applications, business solutions applications, software development tools and video games. It offers product support and consulting services on its impressive array of products, including its widely used Windows operating systems and Microsoft Office software suite.
Tech Stocks Priced for Bargain Deals, Edge Higher on Analyst Upgrades
Analyst upgrades lifted the technology sector on Monday, as cheap valuations and strong balance sheets in tech companies are making for good buys, as outlined in Money Morning's Midyear Forecast on tech stocks.
Analysts say tech stocks haven't been this cheap since 1992, excluding a brief period before the March 2009 bull market started, and now is the time to buy.
"Tech stocks have some of the strongest balance sheets in the S&P 500," Bruce Bittles, chief investment strategist of Robert W. Baird & Co., told Bloomberg. "The valuations are inexpensive - that's another plus. It's a good time to invest in tech."
Hot Stocks: Can Apple Be a Gentle Giant?
Apple Inc. (Nasdaq: AAPL) yesterday (Thursday) supplanted Microsoft Corp. (Nasdaq: MSFT) as the largest technology company in the United States. Apple now trails only Exxon Mobil Corp. (NYSE: XOM) in size, but that size will only make the company a bigger target if it fails to use its newfound market position prudently.
Just last month, Microsoft's market capitalization exceeded Apples by some $25 billion. But Apple has finally overtaken one its great archrivals. But being the new standard bearer for the technology sector brings with it more than bragging rights. It also will make Apple a bigger target for its competitors and government scrutiny.
As far as competition is concerned, there's no question that Apple has outdone Microsoft.