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
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

We Just Found “The Future”

Companies / Tech Stocks Jul 30, 2014 - 10:45 AM GMT

By: Money_Morning

Companies

Michael A. Robinson writes: Hewlett-Packard Co. calls it “The Machine.”

I call it the future of computing.

And it’s just one reason why I think HP (NYSE: HPQ) is among the smartest plays in tech right now.


The technology behind The Machine is extremely complex – “memristor“-based low-power storage; low-cost, high-speed photonic data transfer; and a brand-new operating system to handle it all.

But what The Machine will do – the idea behind this breakthrough hardware – is much simpler to explain.

According to Hewlett-Packard scientists, The Machine could replace an entire computer data center with a single computer the size of a refrigerator.

These data centers, aka “server farms,” are huge clusters of computer servers that serve as the “physical Internet” for technology companies – they house these companies’ most important and vulnerable network components and information. A big server farm can be over 100,000 square feet large and use as much power as a small town.

Just do the math on how much The Machine could reduce the size of a supercomputer or your office’s data “closet” – or how much power it could add to your laptop or smartphone.

Whitman discussed The Machine at a company-sponsored event in Las Vegas last month, but the major media pretty much ignored the news entirely.

Because Wall Street and most investors seem to have discounted HP’s Machine so far, we have a chance now to get in on the ground floor.

In fact, HP was the winner of our Clash of the Tech Titans battle between it and IBM Corp. (NYSE: IBM), which I hosted just a few weeks ago. So, if you bought in then, your floor is even lower.

Today, I’m telling you all about The Machine.

And I’m going to tell you about a conversation I had with a top turnaround executive that leads me to believe Hewlett-Packard CEO Meg Whitman knows that bringing her company back to prominence will require much more than just the slashing and burning we’ve seen so far. This is a huge leap in technology that’s going to make HP a top tech leader once again… and that’s going to be a powerful catalyst toward market-beating gains for you…

Beyond Cuts

HP has done a lot of that cost cutting. Over the past couple of years, Whitman has cut at least 45,000 jobs out of its 300,000+ workforce.

But layoffs aren’t the only or best way to restructure a company.

I’m passionate about turnaround investing, and so, even after 30 years of researching and investing in Silicon Valley, I’m always seeking wisdom about that sort of “special situation.”

And one of the best bits I’ve ever heard came from a one-time Methodist minister who became one of corporate America’s great cost cutters. A few years back, I was fortunate enough to get to pick his brain.

To this day, I’ll never forget how Thomas A. Cooper, former president of Bank of America Corp. (NYSE: BAC), explained a key turnaround fact to me.

“You know, Michael,” Cooper said during the meeting in his office. “Always keep in mind that you just cannot cut your way to greatness.”

His comments hit on something that many investors and analysts often overlook.

To succeed over the long haul, tech company restructurings must include plans for the next generation of cutting-edge products. Otherwise, the relentless pace of innovation will leave them in the dust.

HP is managing to do both – cut costs and develop a groundbreaking new innovation that bodes well for the firm’s long-term success.

From its founding in Palo Alto, Calif., during the depths of the Great Depression until the last few years, this Silicon Valley founding father has pushed the boundaries of computing tech in ways few firms could emulate.

Despite its troubles, HP remains a world leader in PCs, a key maker of computer servers and scientific calculators and one of the world’s most successful printer firms. And it’s a huge supplier to the U.S. federal government.

At around $36, HP stock is up more than 215% since bottoming out around $11 in November 2012 – and it’s already up nearly 6% since I recommended it to you on July 3. But CEO Whitman remains ruthlessly devoted to the bottom line. She continues to cut costs and employee overhead wherever possible.

At the same time, she refuses to get sidetracked by the chaotic environment surrounding HP. Before Whitman arrived in September 2011, the company had gone through five chief executives in six years.

Even worse, the company had to write off nearly $17 billion in charges for bad mergers undertaken by her predecessors. And it’s still paying the price for having missed the mobile revolution.

So, you could forgive Whitman if all she did was focus only on getting HP back on solid footing and let the future take care of itself.

But as one of the sharpest leaders in high tech today, the former eBay Inc. (Nasdaq: EBAY) CEO knows that HP “just cannot cut its way to greatness.” It must prepare for, and produce, the next generation of advances.

That’s why Whitman recently green-lit the truly game-changing Machine.

The New Machine

If the venture succeeds – and all signs are positive – The Machine will have an enormous impact on the future of computing… and our portfolios.

Here’s why. Today’s server farms are located in huge buildings that have acres of servers and related gear.

HP wants to boil all that down to one machine that could fit in your family’s kitchen.

Doing so would give HP a brand-new, likely hugely profitable piece of hardware that is less of a product and more of a generational step forward.

And it would make the company a leader in at least three breakout areas of tech: the burgeoning and interrelated fields of cloud computing, big data, and the Internet of Everything (IoE).

With cloud computing, large entities host their data, software and applications at these remote server farms. Big data is a field in which supercomputers mine mountains of data to find profitable trends or relationships too complex for even teams of dedicated professionals to spot.

And the Internet of Everything is the “super Internet” that will connect an estimated 50 billion devices within just a few years, turning Earth into a hyperconnected “smart” planet.

All of these functions – and especially the IoE, which is still in the development stages – require a lot of computing power. And that power is extremely expensive, based on energy use alone.

Whitman likes to explain the cost of running server farms this way: If worldwide cloud computing was a country, it would rank fifth in the world in terms of energy use.

With The Machine, “energy consumption problems will virtually disappear,” Whitman says.

To the Moon…

If this sounds like “moonshot thinking,” it is…

While developers may try out some smaller Machine applications on Android-enabled devices first, to fully develop The Machine, HP engineers are now writing millions of lines of software code for an entirely new operating system.

Then then there’s the incredible new tech product that lies at the heart of The Machine – a highly advanced computer processor known as a “memristor.”

Electrical engineers and computer scientists have been working on memristors for more than 40 years, starting with circuit theorist Leon O. Chua at University of California, Berkeley back in 1971. And in 2010, HP unveiled a working device for the first time.

Now, HP says it’s ready to use in the next generation of computers and servers.

Memristors are highly complex. I’ll try to simplify by comparing them to semiconductors.

Computer semiconductor chips can either provide processing power or short-term memory. Transferring data between two devices takes time and burns energy.

Memristors perform these processing functions while also serving as computer memory, thus replacing the transistors that form the building blocks of semiconductors.

Plus, memristors can be stacked on top of each other to form 3-D arrays, like mini-towers inside a computer.

One reason why The Machine will run so quickly is that it employs photonics, the use of light to transmit data. And when it comes to speed, nothing beats light.

Cultivating a Turnaround

Here’s how I know for sure that Whitman understands why “you can’t cut your way to greatness,” as Cooper said.

Word around the HP campus is that two years ago some senior researchers gave Whitman a presentation on The Machine. It lasted two hours.

Whitman, the story goes, immediately saw the potential. And despite the fact that she was in the midst of cutting huge chunks out of the firm’s budget, she immediately gave them the green light right then.

She reportedly turned to HP’s chief financial officer and said, “Find them more money.”

HP now says the new product could be on the market by 2018. So, it will be a while before we see meaningful revenue.

But remember, HP is still turning around, and Whitman is doing a great job of restoring profits to the venerable firm.

Consider that in this year’s first fiscal quarter ended April 30, HP’s profits were up sharply. They rose roughly 18% from the year-ago fiscal quarter to nearly $1.3 billion.

HP trades at nearly $36 and has a market cap of $67.37 billion. So far this year, the stock is up more than 30%. Compare that with the Standard & Poor’s 500‘s advance of less than 8%.

If HP just gets back to its five-year closing high of $53.87, reached April 5, 2010, that would mean profits of nearly 50%.

And with Whitman at the helm, I think that’s the least we can expect.

Certainly, she’s making cuts, which will increase earnings per share, always a great catalyst for a stock. But more importantly, she’s investing in cutting-edge technology that lays a solid basis for HP’s future.

So, I recommend you buy in now, before The Machine finds its mass audience.

You’ll get “in the know” bragging rights – and the most profits.

Source : http://strategictechinvestor.com/2014/07/just-found-future/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. 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 Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning 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 investent 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 after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - 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