Hewlett-Packard (NYSE: HPQ) seems like an awfully nice company. It is extending its holiday vacation period from one week to two. Think of all the time that its workers can spend going to the beach, skiing, or spending time in the bosoms of their families.
Of, course, big companies are never that nice without a motive. HP figures it can save money by being shut an extra week. According toThe Wall Street Journal, The Palo Alto, Calif., tech giant notified employees last week that it would extend its normal weeklong holiday shutdown to two weeks to "achieve significant operational savings."
The move may save some expense, but it is also short-sighted. HP has the capital to stay open for the latter part of December and its has a chance to use that time to continue R&D, product development, sales and marketing. Working on its line of hardware and software and reaching out to customers during a period when it is trying to keep revenue up is more important than saving part of one week's costs.
As the recession takes hold, market share will become critical to keep up revenue. HP will be locked in competition for a shrinking revenue pie as companies like IBM (NYSE: IBM) try to take away business.
Given how bad the tech landscape is, HP should keep some of its people working straight through the holidays right up to the end of the year.
This post was written by Minyanville contributor Sean Udall.
Aglient Technologies (NYSE: A) just reported this morning and again the company is simply one of the best tech and science shops, which few talk about.
It guided lower but it was minor compared to most tech names of late. Also, A's stock is down about 35% vs. a space down 50% with many names down 65-80% off of highs so the value and durable earnings quality of A is providing some cover.
Circling back to market dynamics, I've contended many times about my view on the markets' four key problems and the difficulty in gaining traction while these are not yet solved. I won't reiterate this whole theme; however, it is noteworthy that we are so willing to spend $350 billion of the TARP while not addressing FAS 157 as well as the uptick rule. Changing these two issues costs the world "nothing". And they are either done with a "pen stroke or a few key strokes".
Yet changing these rules -- might just save the world billions in additional spending, doesn't require Congressional approval, doesn't require the Fed to expand the balance sheet, and lastly doesn't require more rates cuts which could prove quite inflationary.
This post is part of a series in which TheStockAdvisors.com asked financial experts to name their top stock pick if McCain or if Obama wins the election.
"We expect that an Obama-Biden victory will provide a renewed sense of optimism on the part of consumers; to profit from this expected trend is Apple (NASDAQ: AAPL)," says growth stock specialist Nate Pile, editor of Nate's Notes.
"Apple has been crushed this year on concerns about consumer spending. Any improvement in consumer spending that may come from an Obama win should only add fuel to the fire that is already burning brightly for Apple.
"The company's product line-up is one of the best in the consumer electronics space, and as we have been anticipating for a number of years now, success with products outside of the PC market is translating into growth rates for the Mac line that are significantly above the industry average.
"Apple's stock price certainly suggests that there is a huge buyer boycott going on when it comes to tech stocks these days.
"Part of the reason for the continued slide is being attributed to the lack of a 'major announcement' at a recent publicity event, though I believe the fall has more to do with where we are currently at in the 'psychology cycle' on Wall Street than anything else.
"Though we may have to wait until we get through tax-loss selling season this year to see a significant rebound in the stock price, we believe Apple's best days are still ahead of it, and a win by Obama will only help to accelerate the trends that are already underway for the company."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
"The decline in the price of Intel (NASDAQ: INTC) is disconcerting, but on balance, not a surprise," says tech guru Paul McWilliams.
Here, in his Next Inning newsletter, the advisor reassesses his forecast for Intel and the tech sector made at the start of the year, and his continued optimism for the stock's future performance.
"In January, I initially concluded that mature global economies were likely going to exhibit slow growth in 2008 and may dip through a recession.
"However, I also had forecast that emerging economies were large enough to where their contributions, even though they would also probably see some slowing in 2008, would keep aggregate growth high enough to avoid any serious worldwide macroeconomic pain.
"My conclusion was that while it is normal to expect spending by governments, businesses, and consumers to follow GDP patterns, there are what I saw then and still see now as good reasons to believe there would be a preference given for tech.
"In other words, my belief was then and still is today that spending on certain tech sectors would hold stronger than normal in the face of aggregate GDP slowing.
The editors of All Star Investor explain, "This graphic chip manufacturer stumbled earlier this year, but we find a compelling a turnaround story." Here's his review.
"This is a difficult environment for short-term investors. When the Dow jumps up 200 points one day, and crashes 200 points the next, it's hard to tell where to turn. Calling bottoms is nearly impossible
"In this market, we have become value investors -- seeking an inexpensive company that's almost-undiscovered by mainstream investors.
"Technology is not typically known as a place for value. In fact, quite the opposite. Since the Tech crash, a shift has happened. Certain semiconductors have been hammered over the past several years -- especially in the last 12 months.
"One of those, a leader in graphics chips, has been especially beaten down. NVIDIA fell from a 52-week high of $39.67 last October. The Santa Clara-based chip designer is now trading around $12.00 today. Did it really deserve the punishment the market delivered? We don't think so.
This post is part of a report entitled "Six-pack of technology favorites." You can read about the other top tech stock picks here.
"It's time to watch for buying opportunities -- and one of the companies on my personal list is Broadcom Corp. (NASDAQ: BRCM), whose shares are in buying range right now," says analyst Glenn Rogers.
The contributing editor to Gordon Pape's Internet Wealth Builder explains, "This semiconductor maker is a good choice for investors who would like to add to their information technology position with shares of a first-class company."
"Broadcom, located in Irvine, California, designs semiconductors for the wired and wireless communications industry. It is a major supplier to Apple's iPhone, which has taken the world by storm this past year.
"Specifically, it powers the brilliant display screen that has captivated users since the launch of the iPhone last year. (Full disclosure: I've just picked up my new 3G iPhone.)
"It also provides the chip that delivers the GPS navigation in the new iPhone. The company holds over 2,000 U.S. and foreign patents and has more than 7,400 pending patent applications.
"But Broadcom is not just an iPhone supplier. It also powers the Motorola TV set top boxes, Netgear wireless routers, Bluetooth and Blu-ray applications, digital television, VOIP, etc. There are lots of chipmakers out there but Broadcom operates in the areas that offer the highest growth potential and the least commoditization in this sector.
With concerns over recession, turmoil in the financial sector, fear of rising rates, high market volatility and a rising aversion to risk, many investors have been avoiding technology stocks.
Investors have feared that these economic headwinds will dampen both consumer spending for technology products and reduced capital expenditures for technology in the corporate sector.
Despite these concerns, some of the newsletter industry's leading advisors are looking beyond the current malaise and seeing longer-term value in some of the tech sector's leading players. They believe that much of the "bad news" is already reflected in the price of the shares, with little recognition being given to their longer-term potential.
For those willing to go against the crowd and buy, as they say, "while blood is running in the street," we offer a six-pack of technology stocks that the some top advisors considers to be among their favorite ideas.
Applied Materials (NASDAQ: AMAT), a technology company that provides solutions to industries involved with such things as semiconductors, flat panel displays and solar photovoltaic cells, and whose colleagues include KLA-Tencor (NASDAQ: KLAC) and LAM Research (NASDAQ: LRCX), reported earnings for the third quarter on Tuesday.
They weren't great. The top line decreased by 28%, coming in at $1.8 billion. Adjusted earnings per diluted share dropped well over 50% to 17 cents. Although these numbers are horrible, it should be noted that the company at least beat estimates of 14 cents per share.
Well, not to be a downer or anything, but Applied Materials is not the tech stock I want to be in right now. It is suffering through a dismal economic environment, and the growth rates just don't look good. Not only do you have these year-over-year declines, but you've also got sequential-quarter statistics showing a negative trend. Plus, new orders are down significantly, and the gross margin took a dive.
Is there any saving grace to the report? Yes. Cash flow from operations was essentially flat over the nine-month timeframe at almost $1.6 billion. Hey, flat is better than a decline, correct?
Money manager and newsletter advisor Jim Stack, well-known for his safety-first strategy, recently added Microsoft (NASDAQ: MSFT) to his model portfolio, noting, "We had wanted to increase our allocation to technology which has typically been a leading sector in new bull markets."
In his InvesTech Market Analyst, he explains, "This stock exhibits all the qualities we look for in a new purchase and is currently selling at a very attractive valuation."
"From its founding in 1975, Microsoft has become the world's largest software company with offices in over 100 countries. Its Windows operating system –which runs on 90% of all PCs currently in use – and for the Windows Office applications utilized by over 400 million users.
"This firm is extremely profitable with company-wide operating margins in excess of 40%. The Windows operating system and Office productivity suite have operating margins averaging closer to 70%.
"The company is completely debt free and generates over $1 billion in free cash flow each month. Management has done an excellent job of utilizing shareholder capital with a return on equity of over 40% compared to an average of 15% for S&P 500 companies.
Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
Second, and more importantly, BRCD is paying $3 billion or almost exactly three times the cash and investments on Foundry Networks' (NASDAQ: FDRY) books. So in essence, 1/3 of the deal price is being funded by the liquidity of Foundry Networks balance sheet. Looking at the technology landscape, there are a whole bunch of companies that look like FDRY from a balance sheet perspective.
Also, this deal highlights the fact that even in a market full of angst, companies do look forward to see what business trends they want to exploit. My take is BRCD is seeing it wants a bigger part of the bandwidth pie going forward and the two companies may have complementary technology to help extend their current reach.
Intel Corp.'s (NASDAQ: INTC) quarterly earnings results are like a canary in a coal mine for investors. If the world's largest chipmaker beats Wall Street expectations later today, then shares of every gadget, widget and internet company will raise in sympathy. If things go awry, tech investors better run for cover.
Interestingly, Wall Street analysts are forecasting growth at the Santa Clara, Calif.-based company to slow to a crawl in the quarter but most consider the stock a buy. Revenue is expected to increase 7% in the second quarter, down from 12% in the previous three quarters, according to analysts surveyed by Bloomberg News who are calling for sales to rise 4% this year, half the rate of 2007. Analysts expect the company to earn 26 cents per share on revenue of $9.33 billion.
Earlier this year, tech research firm Gartner reduced its worldwide sales forecasts for personal computers, citing the weakening economy and cautioned that growth could drop into the single digits. But what's driving Intel these days is notebook computers, where sales remain robust. Dell Inc. (NASDAQ: DELL) reported better-than-expected results in May because of growth in laptops sales.
In what seems like an event that's more like the Academy Awards, Apple Inc. (NASDAQ: AAPL) CEO Steve Jobs will take center stage at San Francisco's Moscone Center on Monday to announce something. That "something," if you've been paying attention to tech news over the last month in any corner of the globe, will be the second version of the iPhone.
Expect Apple's stock activity and message board nuttiness to be in overdrive until a few minutes before Jobs give his messiah-like speech about something. You see, the religious love affair much of the media (and diehard Apple fans) have with the company and Jobs himself will create so much buzz that it would not be surprising to see Apple shares top $200 easily and maybe go beyond their 52-week high. That high will come just as Jobs lets the word drop on the next iPhone.
As Timothy Sykes reminds you, don't consider this a prime opportunity to buy Apple. Although, sitting at $190 before the market opens this morning may tempt you, what do you gain with a rise to $200 per share? 5%? If that's good for you in a day or two -- if it happens -- more power to you.
There are some who time their Apple profits on the two meetings or so per year that happen from Apple's top guy (known as Steve-o), but an investing strategy for the long term and a frenzied quest for an extremely short-term gain are two totally different things. I'll be watching with interest this Monday, but still won't have added Apple shares to my stable.
When Dell, Inc. (NASDAQ: DELL) releases quarterly results Thursday how will it do? Dell has managed to quickly enter the consumer retailer market, which has helped it stave off the more valiant Hewlett-Packard Corp. (NYSE: HPQ) from running away with just about ever retailer PC sale these days. But investors are bound to say, "that was yesterday -- what have you done for me today?"
Analysts are expecting the company to report earnings of 33 cents per share on revenue of $15.66 billion, according to Thomson Reuters. Although Dell announced a $1 billion share buyback plan just a few months ago, it needs to all it can to not let its stock price implode. The growth may be over (permanently), and the brand may not be the premier name it once was. Add that to the fact that the competition (most notably H-P) enjoys every cost savings Dell once did, and the picture become way less rosy.
Does Dell have any angles left? From a fundamental PC selling standpoint, it's hard to make that argument. In terms of Micheal Dell's famous comment that Apple, Inc. (NASDAQ: AAPL) should be sold off in pieces and money returned to shareholders. My, my how the tables have turned. Still, Dell is not going anywhere fast and its stock price could be languishing in the dust for quite some time.
That's because EDS and HP would under perform in services when it comes to profitability. EDS's bigger business earned a 1% net profit margin in the first quarter. But HP's services business generated a far higher 9% estimated net margin. Unfortunately -- for reasons described below -- the combined company will probably have lower margins.
Meanwhile, IBM's profit lagged HP's slightly -- it made an estimated 7% net margin in the first quarter in its services business. But IBM is and will remain a much bigger player. Combined, EDS and HP's services business will control 5.3% -- lagging IBM. That's because IBM controlled 7.2% of the tech-services market in 2007 while EDS was a distant second at 3% and HP was fifth, with a 2.3% share.
Sun Microsystems (NASDAQ:JAVA) has not done much right in the last few years. The company replaced founder Scott McNealy as CEO with Jonathan Schwartz who wears a ponytail and writes a blog.
The promised turnaround at Sun fell apart as the company announced lower sales and a loss. At the server firm, revenue for the third quarter of fiscal 2008 was $3.266 billion, a decrease of 0.5% as compared with $3.283 billion in the same quarter a year ago. Sun posted a net loss for the quarter of $34 million, or 4 cents per share, as compared with net income of $67 million, or 7 cents per share, last year.
Sun's plans to compete with the likes of IBM (NYSE:IBM) and other larger rivals have fallen apart. According to the company, the economy has not helped.
Sun may blame the economy, but it has run out of excuses. It will fire another 2,000 or so employees. Schwartz should be among them. The company's board should have difficulty viewing him as a viable leader, but it has made the great mistake of doing nothing.
Sun's shares traded below $14 after hours yesterday, which would put them under their 52-week low. The company's performance is humiliating and it is a sad fact that so many people have to pay for the inability of Schwartz to keep his promise of making the company a viable competitor.
With concerns over recession, turmoil in the financial sector, fear of rising rates, high market volatility and a rising aversion to risk, many investors have been avoiding technology stocks. 
Minyanville Professor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit 
In what seems like an event that's more like the Academy Awards, 
When 
Sun Microsystems
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