Tuesday's Tech Movers: HP, Microsoft, and Amazon

Positive news for Hewlett-Packard, Microsoft, and Amazon.com on Tuesday

Mar 18, 2014 at 10:15AM

The Crimean crisis appears to be fading from investors' consciousness, as U.S. stocks opened higher on Tuesday, with the benchmark S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI) up 0.41% and 0.43%, respectively, at 10:15 a.m. EDT. In terms of "top-down" factors, the market will watching the Federal Reserve, which convenes its two-day monetary policy meeting today. As far as individual names go, Hewlett-Packard (NYSE:HPQ), Microsoft (NASDAQ:MSFT), and Amazon.com (NASDAQ:AMZN) are on investors' radar this morning.

Shares of Hewlett-Packard were up 2.9% this morning after Barclays upgraded the stock to overweight (in other words, buy). Analyst Ben Reitzes wrote that HP could "gain share for several quarters in x86 servers at the expense of IBM/Lenovo, which could also help support sales of 3PAR storage gear." Such gains would boost earnings per share this year. Furthermore, HP is "well positioned for growing buybacks and dividends as it returns 'at least' 50% of free cash flow to shareholders," according to Reitzes. For reference, Hewlett-Packard returned 35% of free cash flow to investors in its fiscal 2013.

It appears that HP's turnaround is actually turning. Without the distraction of headlines concerning serial multibillion-dollar writedowns, investors are finally able to focus on a value drivers (rather than value destroyers): cash flow generation and capital returns.

New Microsoft CEO Satya Nadella is beginning to make his imprint on the company. Nadella is scheduled to hold a press event for media and technology industry executives in San Francisco on March 27; reports suggest he will unveil a version of Microsoft's popular Office productivity software that will run on Apple's iPad.

The decision would represent a break from the monolithic, defensive strategy Microsoft adopted under Nadella's predecessor Steve Ballmer. It suggests the new chief recognizes that Microsoft's competitive strength lies in software rather than consumer devices. With the shift away from PCs toward mobile devices, Microsoft has struggled to adapt to a new environment that isn't built around the Windows operating system. This decision -- assuming the reports are accurate -- was a long time coming, but it's the right one.

Speaking of hardware and industry shifts, Amazon.com will begin selling a device to stream video in early April, according to The Wall Street Journal. The device will compete with Roku, Apple TV, and Google's Chromecast, but Amazon has a secret weapon: its Prime subscriber base, which totals more than 20 million. According to the Journal, the device would probably include incentives for Prime members (last week, Amazon announced it was raising the cost of a Prime membership). Amazon is showing enormous savvy with its digital strategy; the combination of the Prime model and its original content and hardware is beginning to look very powerful indeed, as the company continues to make headway into our living rooms.

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Alex Dumortier, CFA has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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