Welcome to Week 10 of the Big Idea Portfolio. This time, salesforce.com's (NYSE: CRM ) modest rally wasn't enough to offset a pullback in Google's (Nasdaq: GOOG ) share price. Details below, but first let's dig into the numbers:
|S&P 500 SPDR||$127.71||$137.57||7.72%|
Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.
For all the hoopla leading up to launch day for Apple's (Nasdaq: AAPL ) new iPad, the stock ended down just one penny from the week prior. Color me surprised. Strange naming aside -- the device is literally called the "new iPad" -- the tab is already proving to be highly disruptive.
Reuters is reporting that customers who pre-ordered a new iPad may not receive the device by March 16, when the tab officially arrives in Apple's retail stores. The implication? Don't be surprised if Apple easily exceeds last quarter's 15.4 million units sold.
Or at least that's how it seems from my view at the South By Southwest Interactive conference here in Austin, Texas. There's a visible blend of art, content, video, and gaming at SXSW that wants badly to be broadcast over high-resolution devices that can be carried anywhere. Apple's new HD-quality iPad is that sort of mechanism, arguably the best and most portable television money can buy.
So far, enthusiasm for digital content hasn't moved Apple's shares. Interestingly, Google has a similar yet more severe problem. The search king's shares fell more than 3% this week, when investors yawned at the prospects for the company's rebuilt and rebranded digital-entertainment store, which it dubs "Google Play." Targets include iTunes and possibly Amazon.com's Instant Video, though aiming at the latter has its difficulties. The Kindle Fire is already on track to be the most successful Android tablet ever built.
Meanwhile, news of increased competition appears to helping salesforce.com. Rival social-tools supplier Jive Software (Nasdaq: JIVE ) this week announced plans to introduce a customer-service product. Jive Social Customer Service appears aimed at Salesforce's Service Cloud, with both promising to use social tools to better engage and serve clients. Will the new tools have an impact? I'll be keeping close watch on Salesforce's margins, yet I also think it's far too soon to call Jive a disruptor.
The week that was
Small caps and tech led the markets last week. The Dow rose marginally as the S&P 500 and Nasdaq rallied for the fourth consecutive week, CNBC reports. The small-cap Russell 2000 crushed them all, however, ending the week up 1.32% versus just 0.60% for the second-place Nasdaq. The CBOE volatility index (VIX), widely considered the best gauge of fear in the market, fell more than 4% as investors appeared to regain confidence in the equity markets.
Larger-than-expected job gains helped induce the rally, while consumer-staples stocks mirrored tech in a game of competitive Ping-Pong. Take Starbucks. The coffee king's shares set a new all-time high last week, after the company announced plans to compete with Green Mountain Coffee Roasters' (Nasdaq: GMCR ) popular though at times troubled Keurig singe-cup brewing system. Shares of Green Mountain fell more than 15% on the news.
Such is the nature of investing in innovators; even a whiff of disruption can send a stock reeling. That's why my Motley Fool Rule Breakers teammate, Karl Thiel, and I are at SXSW this week: to sniff out disruptions early enough to profit from them. Stay tuned here at Fool.com for our trip reports.
And see you back here next weekend for more tech-stock talk. In the meantime, you can check out the Fool's latest special report -- "3 Stocks That Will Help You Retire Rich" -- and add the Big Idea portfolio stocks to your Foolish watchlist for ongoing, up-to-the-minute coverage. Both the report and the watchlist are 100% free to use:
- Add Apple to My Watchlist.
- Add Google to My Watchlist.
- Add Rackspace Hosting to My Watchlist.
- Add Riverbed Technology to My Watchlist.
- Add salesforce.com to My Watchlist.