Old PC isn't what it used to be
The smarter tech companies have already moved away from the personal computer.
What would have happened if Microsoft (MSFT) had said something positive about personal computers this week instead of something negative? How much would the stock have moved? How much would the group have moved?
Maybe the issue, though, is that there isn't much of a group anymore. Remember the PC makers? How about the PC component makers? They've all kind of realized this day would come, when the personal computer wouldn't have growth, and they have all moved on, including Microsoft.
Think about it: Microsoft has made a huge bet on mobile phones with Nokia (NOK). It has made a colossal bet on games with the Xbox. It has made a potentially game-changing wager on video with Skype. Sure, it is hostage to a certain degree to personal computers, but this stock isn't down 10% like it would have been even five years ago, because CEO Steve Ballmer saw this day coming. Give him that.
Same with Intel (INTC). Tuesday Intel came out with one of the most significant design wins in the company's history, a deal with Motorola Mobility (MMI) to be in Android. Sure, it isn't in the Apple (AAPL) iPhone, and there will be many other chips in the mix, ones from ARM Holdings (ARMH), which is in the iPhone, along with, of course, chips from Qualcomm (QCOM), which is still the de facto cell-phone chip player.
But Intel saw the writing on the wall, too.
But if you have been listening to Michael Dell lately, he has moved Dell (DELL) aggressively away from low-margined personal computer selling into the higher-margined software and solutions business. It hasn't paid off yet, but I think it will when things get better in Europe.
Even Micron (MU), a company with dumb chips that always had little gross margin leverage if it had any at all, has moved aggressively into flash, which has been a big winner for it.
The lone holdout, the company most reliant on personal computers of the major hardware companies, is Hewlett-Packard (HPQ), and even that tone-deaf, customer-blind company was trying to ditch personal computers during the waning days of the previous CEO's tenure.
That's why the tech sector wasn't pole-axed by the Microsoft news. It doesn't mean there aren't huge problems with many of these companies, some of which could still report some pretty nasty quarters, particularly those in the enterprise business or in the telecommunications business.
But the days when a negative personal computer comment from Microsoft can take the whole tech group down are now over, and it's time for those who regard personal computers as a growth vehicle to wake up and smell the coffee. It's just not where the action is anymore, and even the companies that pioneered the device and made it great at last know better.
(Microsoft owns and publishes Top Stocks, and MSN Money site.)
cramer has to be a ripoff because nobody could possibly pick as bad as he does
LOOK AT HIS PAST PICKS......DO NOT TAKE MY WORD FOR IT
since he said avoid banks with bac near 5 the financials have soared with bac hitting 7 today
this guy is so wrong so often that he is obviously pumping and dumping..........
for MSN to allow his crap is criminal
while not a growth vehicle, PCs are ubiquitous in our world and everyone has one. they break and are replaced. what's left is grabbing a share of that constant market, like Charmin toilet paper or Reynolds wrap aluminum or Coke..
- Microsoft 5-year -26.5% is down from a 5-year high of almost $38/share in 2007 to its current price of $27.90
- Google 5-year -12.8% is down from a 5-year high in 2007 of $714/share to its current price of $622
- While Apple 5-year +110.5%-400% is up to $419 a share that in 2007 peaked to only $199 in December (Jan 07 was $84)
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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