Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

There’s Still Money to Be Made in This “Dead” Business

Companies / Tech Stocks Jan 23, 2013 - 08:17 AM GMT

By: Investment_U


David Eller writes: So, is the era of the PC finally over?

Last week, Gartner published PC-unit growth estimates for the fourth quarter, showing a decline of 5%. This concern was supported by Intel’s (Nasdaq: INTC) December quarterly results, showing a 6% decline in its PC business.

Clearly, there’s a shift occurring as people choose tablets over laptops. But I believe the PC isn’t dead – it’s just sleeping. And more importantly, there’s still a place to profit.

When I was getting my computer science undergraduate degree in the late 1980s, our main programming language was COBOL. After graduating, I never touched it again. Technology evolves… And just as applications once written in COBOL shifted to C++ and eventually C# or Java, the market for hardware evolves as well.

Compared to a tablet, laptops are still heavy and get poor battery life. Commuters were the first to convert, because you just can’t use a laptop on a subway. Then, as third-party keyboards, from vendors like ZAGG (Nasdaq: ZAGG), made tablets an alternative for note taking, laptops became less visible on campuses.

But you can’t get around the fact that you can’t do the same things on a tablet as you can on a laptop or desktop. Tablets are better for consuming content rather than producing it. It’s true that I’m writing this article by dictating to Siri on my iPad. But for any graphics or tables, I need to use PowerPoint or Excel.

So what does this mean for the PC market? Well, where people once had multiple PCs, the number of PCs per person is likely to shrink. You’ll still need a business computer but maybe you won’t need to buy that laptop. The PC market is going to have to find a new level.

The PC business is mature and maybe even declining in size, but that doesn’t mean there aren’t opportunities to pocket some dough. Dell (Nasdaq: DELL) potentially going private is one example. If the market doesn’t reward a stock for generating piles of cash, somebody will eventually come and buy the whole company, rather than just a few shares.

DELL’s $0.32 dividend offers a 2.5% yield. And if it’s taken out by Silverlight at $13.50 in the next year, you’ll see 5% share price appreciation. It’s not one of the 10-baggers that you’ll brag about to your golf buddies, but it looks much better than the 1.9% you are getting for investing in a 10-year treasury bond.

Shares of HP (NYSE: HPQ) offer a 3% dividend. And with businesses in the printing, PC, server, services, storage, networking and software industries, it’s ripe for a restructuring. If there’s one thing Wall Street likes, it’s layoffs – but the timing is uncertain. CEO’s justify large salaries by managing large businesses, and I just don’t trust Meg Whitman to unlock the value in HP by breaking it apart.

Our favorite stock in the PC sector is Intel. It’s the supplier to Dell and HP, as well as Lenovo (OTC: LNVGY). After reporting earnings this week that were in line with expectations, Intel traded off by 6% and is now offering a yield of 4.2%. This is a decent yield to be paid while you’re waiting for Intel to increase its presence in mobile devices – or for one of the PC vendors to build a credible convertible laptop.

The stock took a hit this week because the company stated that it would continue to invest in its core businesses and guided capital expenditures ahead of what analysts were expecting. Since the company is trying to build a presence in mobile and has visibility into design wins, it seemed like a good idea. But some analysts didn’t like it. On the flipside this week, Moody’s issued a note on January 17, chastising HP for neglecting to invest in R&D over the last six years. Analysts always find something to complain about…

Microsoft (Nasdaq: MSFT) is another option, but one that is likely to have baggage over the next few quarters. The dividend is yielding 3.4% but is likely going to have a difficult earnings call we wouldn’t want to get ahead of. Numbers will likely be in line on the strength of office and corporate licensing agreements. However, the failure of Windows 8 and the mispricing of the “Surface” tablet are likely to put pressure on the share price, as the expectations for growth from these products evaporates.

Microsoft had estimated that it would sell two million units of the surface tablet in the first quarter shipping, but analysts think that the number will likely be closer to one million. Compare this to Apple (Nasdaq: AAPL), which sold three million units of its newest iPad in the first three days it went on sale in November. We would wait to consider buying Microsoft until analysts begin to speculate about a dividend increase as we near the annual meeting in July.

The PC market isn’t dead. But after three decades without competition, there is now an alternative: the tablet. DELL has declined from a share price of $26 in July 2000, to $8.70 in October 2012. But as investors look at cash flow rather than growth, companies managing their businesses responsibly will find a bid.

Good Investing,

by ,

Source :

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email:

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules