Apple’s (AAPL) stock price has tripled in the past two years, making it the second most valuable company in the U.S. Profits and revenues at other tech companies are soaring. And investors can’t wait to get their hands on the latest social networking IPO.
All of which makes it strange to ask: Why does Wall Street hate Silicon Valley?
And it’s not just me saying this. “The public markets hate tech,” said Marc Andreessen at the recent D: All Things Digital technology conference. He’s as plugged-in as anyone in the valley, so he’s worth listening to.
Sounds crazy, I know, but consider this: By one of the most fundamental methods investors use to value stocks, Wall Street thinks more highly of dowdy PG&E than it does of mighty Apple. And Apple’s not the only big tech company that’s lost Wall Street’s love.
If that surprises you, wait until you hear why: Wall Street thinks we’re getting old. Yes, after years of parading sexy Silicon Valley around on its arm, the stock market has dumped us.
by Raghu Gullapani, SmartStops.net contributing editor
AAPL GOOG IBM AMZN
Over eight months the market has steadily climbed up. This climb has been led by the technology sector. Four explosive companies have led the charge.
Apple (AAPL) has led the charge but of late, the charge has stalled. This slowdown in forward momentum is reminiscent of price action last summer. From a technical perspective, the stock has been forming a bull flag and has been holding above its 55 & 210 ema. I would be hesitant to invest more than a feeler at this point until it more clearly resolves to the upside and starts to break above resistance at $360. SmartStops.net indicates the short-term stop is $341.06 and the long-term stop is $339.49
Google (GOOG) has been the laggard in this group for some time now. Lower than expected earnings and the market’s disdain for new CEO Larry Page have led it down. And while it may be tempting to buy on recent news, the technicals don’t bear it out. The stock is trailing the 55 and 210 ema. Smartstop.net projects the short-term stop is $527.77 and the long-term stop is $525.04
IBM (IBM) has shown relative strength, leading the 55 and 210 ema. After a brief pullback the stock looks like it may make new highs. Smartstops.net has the short-term stop at $165.73 and the long-term stop at $158.75
Amazon (AMZN) has been the recent leader in this group after nearly bouncing off it 210 ema. The stock is showing a lot of relative strength and looks to continue to make new highs. Smartstops.net has the short-term stop at $187.85 and the long-term stop at 168.24
The four horsemen were leading indicators of doom. Keep an eye on leaders to protect yourself from volatile markets. Market leaders are known to drop 72% from their peak per Investor’s Business Daily.
Technology giants, Apple Inc. (AAPL) and International Business Machines (IBM) reported stellar quarterly earnings, smashing analyst expectations and shinning a ray of light on the technology sector and the exchange traded funds (ETFs) that track it.
Apple reported a fourth quarter increase in revenue to $26.7 billion, while boasting gross margins of 38.5 percent and net income of $6 billion, or $6.43 per share, beating Apple’s own forecasts of revenues of $23 billion and a gross margin of 36 percent. Furthermore, these numbers crushed the $3.38 billion in net income that the Cupertino, California-based company boasted for the same period the previous year. This jump in revenue was primarily driven by increased consumer spending and hence better than expected sales, which included 16.24 million iPhones, 7.33 million iPads, 4.13 million Macs and 19 million iPods. Analysts were expecting sales in the realm of 15.5 million iPhones, 6.2 million iPads, 4.2 million Macs and 19 million iPods. Read More…
The technology sector as a whole is relatively broad and somewhat volatile, but the enterprise-tech sub-sector is expected to see prosperity convincing many of the industry’s big players to bet big on it.
As momentum of a broader economic expansion picks up, the labor market starts to stabilize, business investment increases, corporate technology budgets increase and activity in mergers and acquisitions picks up, demand for enterprise computing will likely continue to improve.
These economic trends, combined with easy access to debt, an appetite for acquisitions and plenty of cash, have pushed technology titans International Business Machines (IBM), Oracle (ORCL), SAP (SAP) and Cisco (CSCO), to restructure their overall business plans for the next few years to reap the benefits and stay bullish.
IBM plans on bulking up its software business and placing less of an emphasis on hardware services. CEO, Sam Palmisano, recently announced that the company expects to spend nearly $20 billion on software buyouts between 2011 and 2015. IBM has already started to enter the software market through its acquisitions of 57 different software companies over the past 7 years. This transitional focus is expected to enable the company to nearly double its profits by 2015. Read More…