How did techs not see the cloud coming?

Many didn't even hear mobile rushing their way either. The real winner may be the company that enthusiasts love to hate.

By Jim Cramer Jul 18, 2013 9:38AM

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Clouds in a blue sky (© Purestock/Getty Images)How did they not see cloud and mobile coming? How were they not able to move fast enough? What were they thinking?


Do you know those questions can be asked of pretty much every information technology CEO who has reported so far, with the exception of Sandisk (SNDK) and Xilinx (XLNX)? When you listen to these quarters just reported you realize just how disruptive both cloud and mobile are.


Unless companies are specifically built for cloud or mobile and have the cost structures and infrastructure in line with those two themes, they just couldn't deliver what investors wanted.


Take Intel (INTC). Wednesday, both on television and on the conference call, the executives bemoaned how slow they were to mobile. "We were a little slow to recognize the trend toward mobility," CFO Stacy Smith told CNBC. Huh? How could they not see this coming? How did Yahoo (YHOO), before Marissa Mayer, not see it coming? She admitted that the company, a little more than a year ago, didn't see mobile coming.


How about cloud? SAP (SAP) and IBM (IBM) admitted that the accelerated move to the cloud hurt profits and revenues. Oracle (ORCL) said as much when it reported last, although Oracle did team up with Salesforce.com (CRM), which saw these trends coming years ago, to get moving faster on the cloud. But it may not matter for Oracle, because its infrastructure is heavily non-cloud based.

Meanwhile, Sandisk, often considered to be the lightweight of techs because of its focus on flash, blew the numbers away because flash is in the sweet spot of mobile. Xilinx also reported a terrific number because it saw mobile and the accelerated move to video coming. But still, because of weakness in Asia, Xilinx gave a muted outlook. I think they were just being conservative, but it did cause the company to catch a downgrade and muted the original excitement.


Now, after these reports, there is no doubt whatsoever that the old-fashioned, expensive software that's sold by salespeople to institutions with hefty licensing fees may rapidly become a thing of the past. That's a high-margin business.


We also know that personal computers were high-margin businesses and the new, smaller-form factors ("ultra mobile" as Intel calls them) are the bane of the existence to a company like Intel that has spent so much capital on other larger-form factors, and, I might add, its stock, where it bought back $3 billion worth. What's it done for the company? I don't know, I have to tell you, though Intel missed the Internet backbone business, which it then ceded to Cisco (CSCO). It missed the mobile business, which is dominated by Qualcomm (QCOM), and it missed the tablet business, which is dominated by Arm Holdings (ARMH). It's sad that this company's not growing at all. Yep, flat revenues.


But it beats the declining revenues that IBM's got as it wrestles with both macro fears and the possibility that its software isn't going to be as profitable given cloud inroads, either. At least SAP didn't talk about declining revenues. There, though, the cloud, as fast as it moves toward it, ends up hurting as much as helping the whole company's sales and margins.


In the end, the real winner here may be the company that tech enthusiasts love to hate right now because of its high price-to-earnings multiple, Salesforce.com, which is literally based on the fastest-growing trends out there in social, mobile and the cloud. You will never hear CEO Mark Benioff say he didn't hear it coming. His whole company is built on the premise that the holy grail of social, mobile and cloud is the only way to go. No wonder the price-to-earnings ratio is high. It's deserved.


cramer


Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust is long CSCO.




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42Comments
Jul 18, 2013 1:36PM
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Now that was funny LMAO.....Big Spender and Little Beav in the same Investment Club.

Probably would be okay if they didn't "club" each other sh!tless, unless they are one in the same..

A blog Bro-Mance...LMAO.

Only at Morton's in Vegas, where else..

Sorry, just trying to have a little fun, Regal. But let's face it, you put out the invite. 

Jul 18, 2013 9:55AM
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"the cloud" as a concept will be the next big thing.  however to name drop just one company as a "buy" (Salesforce.com) is pretty lame. 

 

the biggest fuss i have in my home PC is having to eventually buy another one and move all my data and software over to another one.  so i put it off and buy perhaps every 5 to 7 years.  this is also a fuss in most businesses.  everytime you get a new employee - there's a new PC and related software. 

 

"the cloud" once in place should enable our subscription society to simply place everything "there" and pay perhaps $20 a month - for life - so when we upgrade computers there's no longer the same fuss. 

Jul 18, 2013 11:01AM
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You know I don't think I have ever seen a CGT11 report that said "high volume".
Jul 18, 2013 1:53PM
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OMG, ABS you are killing me...I'm on the floor....Miss Lilly hand me the Laptop..

 

Isn't Regal married to some big JEW  wife or something? They can get mean, I've heard.

Jul 18, 2013 11:47AM
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Cramer, as usual, you have no clue about technology,  You must think IT stands for idiot training.  The cloud needs more than mystical magic to appear.  Things like processors, memory, storage, wire, secure transportation will make it work.  Sound familiar?  But wait, there is more!  Around the corner is the home cloud, owning with ease like the smart phones of today and having a cloud without mystery.  Prepare for a technology boom.
Jul 18, 2013 2:21PM
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So MonicAA what's happening with the Benghazi and IRS "scandals" ......were you not predicting EVERY DAY for months that this would bring down the president !!!

I seem to recall in October last year you were predicting "big news" was coming that would push mittcula into the Whitehouse !! How did that one work out for you ??

If you are rich all I can say is there must be big money in being the fluffer for ny gay porn world ......but I am sure you are the go to guy for them due to your 50 years of experience ......

See u soon sh*tbag ....   ; )   
Jul 18, 2013 2:01PM
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And how's the predicting business going for you .....monicAA

What is happening with all those scandals ?  Benghazi ...IRS .....Romney's dog ???

What a dik likkin tool you are you phat phuk of a loser....

So rich he can troll around the internet all day !!! LMFAO .

Fess up -- mommy's basement right !!!  
Jul 18, 2013 1:52PM
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Hey Jill ........ I would advise you to go for Sgt. Frank. He's more of a man than Beav. Other than that you can hardly tell them apart.
Jul 18, 2013 11:26AM
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Basically I don't even understand the concept of or usage for "cloud."

I guess the Mobile devices being carried around today, may require it?  Or users are only buying into it because their friends say: "it's a gotta have."

That would be the Gen X'ers and maybe the Millinials(sp)?

 

Actually I didn't think "any" of this concept was new, and believe it was one basis, that Companies like EDS built their business on...'S'toring 'D'ata 'E'lectronically for their customers, for a subscription or storage capacity price...Mostly business customers.

 

As far as PCs, when I would build them for personal use...We would over build them, add various software and applications that would serve us for maybe up to 10 years.

3 times normal capacity, along with supporting the PC with other bells and whistles, if need be.

A little more expensive on the git go, but paid off in the long run..

The last Systems lasted about 12 years, and worked fine for us until then.

You have to perform maintenance and keep them clean along with fire walls and updated virus protections...Software updates or Apps, were hardly ever a problem...Until other systems no longer supported.

Any storage could have been put on two different types of disc...And most pertinent info was stored at or off sight, by our providers of services..

Today only one storage burn, that I seldom use.

But I don't store a lot of stuff that is critical, like you guys working or in business.  

Jul 18, 2013 11:51AM
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CGT1....May not know what high or low volumes are....

Those targets are much lower nowadays, and heavy volumes usually "only appear" on very good or somewhat bad news on a specific equity/stock.

Unless there is a "market swoon", don't expect a lot of action, CGT.

 

Mutual Funds and 401K plans don't "churn" everyday, and individual investors like myself are small potatoes.....HFT platforms trade continuously, so there is "no build-up" in a week of trading for dollars;

The HFT's are trading for nickels and dimes, everyday unless they get lucky, in the case of PM this morning.....As for us small investors, there might be a hell of a lot less of us.

Jul 18, 2013 1:49PM
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I dunno ABS, you always have to keep one open eye on good old Jimmy-Boy.

He might be about one of 20 I would watch, from afar..

 

Time to go get our other tires installed....OMG is it hot.

Markets will take care of their own.

Jul 18, 2013 10:22AM
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I think it's outrageous that yet another "bank"- Morgan Stanley- exceeded expectations. What sort of expectations were anticipated from a shifty financier getting free money from the Federal Reserve and putting it into a rigged manipulated stock market... what's the risk? Nobody in America values banks, they caused this Depression and now they keep it stoked by continuous QE. It's way past time to END BEN AND QE TODAY. Close the banks, end the Federal Reserve, get ID of Wall Street. Restore the America that leads the world through it's United States. Just remember America... our actual total indebtedness from this crap is way more than $1 quadrillion. That's $1,000,000,000,000,000 and at just 1% interest in pay-back... the first $10 TRILLION goes to the wealth class. Is THAT your idea of a free country?
Jul 18, 2013 1:58PM
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Aww how sweet ....monicAA is back to cup uncle jimmy's balls ....just like when he was a little boy .....

So monicAA I am starting to see why you love zimmerman so much as I was reading about him being a child molester and what with being a pudgy loser with a face vaj I would say he is right up your alley !!! 

Or should we say your "Holland Tunnel" .....

Jul 18, 2013 1:39PM
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Ice Cold...I think that new IPO on Phillips66 is going to be PSXP , watch for it on Tuesday of next...
Jul 18, 2013 12:46PM
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2 weeks ago cramer pushed his old favorite Huntington bank and dissed BAC..........I told you to watch out .......how does this hack keep his job?
Jul 18, 2013 12:27PM
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Hah, in my case it's, GET OFF MY LAWN...

And in How the Game is Played...In the case of Phillip Morris Int'l (PM) this morning.

 

PM came out last night or early with earnings, probably not matching "expectations."

And Tobacco usage is dropping Worldwide..

The "big boys" beat it down in early or "pre-trades" by about $2.30 negative...

I was swearing at the big boys or my computer one...Miss Lilly thought I had finally lost it.

By 10:30-11:00a...The stock had recovered and even went green by .10-.15 cents..

Volume now is a little over 3 mill, compared to an average of about 5 mill over the last 90 days.

So as all can see, Someones were probably making at least or about $4.50 a share this A.M.

In and out, manipulation at it's best, a pretty nice swing.

I was just glad to see the reversal back to even or better.

I might have been able to play and maybe (yes a big maybe) made about $2K-2.5 in about an hour.

But like I said, I'm content....But that's how the game is played.

Jul 18, 2013 12:04PM
Jul 18, 2013 3:15PM
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Thank you TOG.  I saw PSXP listed on another article about upcoming IPO's.  But I dunno.  I tend to avoid IPO's.  I did get in on the Visa IPO and made some money.  Seems like it's been a long time since Conoco spun off Philips and now Philips going public.  Maybe they had to fill out a lot of forms with the SEC.  In triplicate.  We'll see.  I've already got some money in pipelines.  SDT, where I don't want to put any more money, and PSE, where I am willing to put more money.  So in a way, I've got the oil covered with COP and the pipelines and tanks covered with SDT and PSE.  However, I personally don't think you can own too much oil stock.  Oil is an investor's best friend.

 

If Schwab had X number of shares of PSXP allocated to their brokerage for the IPO and could sell them to their clients (like me) at the set opening price, then maybe I'd buy.  Other than that, two minutes after public trading opens you're either paying too much per share or not wanting to buy in the first place.  Sounds too much like bidding on Cabbage Patch dolls on Ebay.

 

So the new U.S. $10 bills are orange.  Have you looked at them?  I mean, they are orange in color.  Since when did this country starting having orange money?  The U.S. Mint has gone nuts.

 

 

Jul 18, 2013 3:12PM
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Of course they saw the cloud coming, they couldn't execute or reposition fast enough.
Jul 18, 2013 1:06PM
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Volumes..Fat or Thin, really don't think they mean much anymore, EXCEPT for events.

 

In the case of the "most actives" list this a.m.  BAC is on the list usually about everyday..

But Ebay and TSM(Taiwan SemiC Mf'g) are on it because of events..

 

EBay because of downgrade and probably numbers...about 25 mil shares b-4 noon.

TSM probably cause of numbers(did not chk)...about the same 25 mil  also earlier.

Yes both down 6-7% dollar wise, heavy volumes and events..

Phillip Morris (PM) even with it's apprx. $5 dollar swing, doesn't even make the list..

So volumes are not really an issue, and maybe a moot point....IMO. 

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