Why Microsoft and GoPro Shares Are Rising

The Dow Jones Industrial Average (DJINDICES: ^DJI  )  shed more than 30 points as of 11 a.m. EDT. A few tech stocks, including Microsoft (NASDAQ: MSFT  )  and GoPro (NASDAQ: GPRO  ) were outperforming the broader market, while Intel (NASDAQ: INTC  ) traded flat.

Microsoft said to plan layoffs
Shares of Microsoft rose more than 0.5% on Tuesday following news that the company was about to eliminate thousands of jobs, reducing its workforce as it integrated Nokia's handset division. According to Bloomberg, it could prove to be Microsoft's largest round of layoffs ever, and may be announced this week. 

With its acquisition of Nokia's handset business, Microsoft has 130,000 employees -- a sizable number. Most of the cuts are said to come from the two areas where the companies overlap, but some reductions in engineering and marketing are possible, as new CEO Satya Nadella attempts to remake Microsoft for a "mobile-first, cloud-first" world.

For investors, the job cuts should not be terribly surprising. Microsoft will look to be more efficient in the wake of its Nokia acquisition, but the cuts shouldn't be taken as a sign that trouble is brewing. Still, the company's upcoming earnings report will be key, as Microsoft's management lays out its vision for the future. The Windows-maker will report earnings on July 22.

GoPro benefits from analyst initiation
GoPro has been a volatile stock since its IPO last month, and remained volatile on Tuesday, surging nearly 9%.

To some extent, the rally may have been a bounce back from Monday, as shares of the digital camera company tanked to start the week. That decline appeared to be predicated by a cautious article in Barron's, which warned that GoPro's "thrill-filled IPO adventure may end badly."

Analysts at JMP Securities disagree. They initiated coverage on GoPro shares with a market perform rating and $60 price target on Tuesday, arguing that GoPro is a durable brand, one that appeals to consumers with active life styles. At current levels, JMP's price target represents a possible premium of more than 50%.

That may be the case, but GoPro is, at current levels, aggressively valued, and its volatility has made it prone to severe swings on a regular basis. While GoPro is a unique company, one that's growing and (unlike some other recent tech IPOs) actually earning a profit, it should be reserved for speculative portfolios.

Source: Wikimedia Commons.

Intel unmoved ahead of earnings
Chip giant Intel was largely unchanged early on Tuesday, with shares down just slightly, mostly in line with the broader Dow Jones. Despite its relative calm, investors in the stock should keep a close eye on the company and brace for some volatility.

Intel is set to announce its quarterly earnings today after the market closes. While it may shed some light on its push into wearable computing, and its continued effort at breaking into the tablet and smartphone processing market, Intel's results should primarily reflect the state of the traditional PC market -- in particular, the demand for Windows-powered PCs among businesses and consumers. Intel's report, then, could have an effect on several related names, including Microsoft.

Demand appears to be good -- Intel raised its revenue guidance last month on better-than-expected demand -- but investors should look to Intel's future guidance. While the current PC upgrade cycle appears to be in full swing, it could be short-lived.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2014, at 11:48 AM, Jdering wrote:

    One thing Barron's article didn't take into account is the usability of the product in question (GoPro). He talks about FlipCam and how it didn't see the mobile phone camera revolution which made it obsolete and ultimately caused its downfall - thereby suggesting the same thing will happen to GoPro. The biggest miss on this prediction is that no athletic or cinematographer user would choose to use their phone for shooting the footage - mostly because they don't want to risk damaging their phone during a shoot. Would you strap you smart phone to your head and jump a canyon or go surfing in big waves? Why risk losing your phone and arguable a millennial's connection to their life and community when there is a perfectly good alternative which is designed for the job at hand. This fact alone should dispute Barron's conclusions and demonstrate the future potential of the product line.

  • Report this Comment On July 15, 2014, at 1:37 PM, tilolite wrote:

    @Jdering: like most GoPro fans, you are comparing GoPro to today's smart phone. The next generation of smart phone can easily add the GoPro's most desirable features as they have done with everything else. This feature integration is what killed FlipCam, the GPS makers, and soon GoPro. GoPro will have to work extremely hard to stay ahead of the game and will eventually run out of ideas.

    Why would you want to carry an additional device when your phone can do it too (well enough is enough for most users)? My advice is to short GoPro.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3029508, ~/Articles/ArticleHandler.aspx, 8/29/2015 10:03:38 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

Today's Market

updated 1 day ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%
GPRO $48.18 Up +0.42 +0.88%
GoPro CAPS Rating: **
INTC $28.42 Up +0.70 +2.53%
Intel CAPS Rating: ****
MSFT $43.93 Up +0.03 +0.07%
Microsoft CAPS Rating: ***