Welcome to week 152 of my stock-picking throwdown
with Mr. Market. Let's get right to the numbers:
|Akamai (Nasdaq: AKAM )
|Harris & Harris
|IBM (Nasdaq: IBM )
|S&P 500 SPDR
Source: Yahoo! Finance.
*Tracking began Aug. 7, 2008.
**Adjusted for dividends and other returns of capital.
My 20-point lead remains intact as we prepare to close this three-year contest to see who's better at creating value for investors. Will it hold? I'd love to believe so. But with debt delirium overtaking Washington and fresh evidence that investment bankers have learned exactly nothing from the leverage-fueled crisis of three years ago, my inner skeptic remains on high alert.
Indexers aren't nearly as concerned. Indices enjoyed heavy rallies last week even as House Speaker John Boehner walked away from negotiations over averting a U.S. debt crisis.
Investors appear to believe a deal will get done. Or maybe they're focused on sound fundamentals. As has been the case for several quarters now, big names reported good earnings last week. Shares of McDonald's (NYSE: MCD ) hit an all-time high after the burger flipper reported big gains in same-store sales around the world. Europe led the way, as comps rose 9.1% in that region.
Among the smaller caps, InterDigital (Nasdaq: IDCC ) soared close to 70% after the company said it had hired an investment banker to review buyout possibilities. Google is rumored to be mulling a bid.
The week in tech
In other digital buyout news, Latino social network Quepasa (AMEX: QPSA ) soared 28% last week after announcing a $100 million deal for myYearbook, a former Baby Breaker and popular social site that uses casual games to boost engagement. My Foolish colleague Rick Munarriz sees promise in the combination.
By contrast, last week's large-cap tech reports failed to capture much enthusiasm. Microsoft (Nasdaq: MSFT ) beat estimates, but revenue from Windows products fell for the second consecutive quarter. Around the same time, Intel (Nasdaq: INTC ) warned of slower PC sales growth even as it, too, reported good results.
At issue is form. We're in the early stages of a paradigm shift that's seeing more computing done in small devices, such as smartphones and tablets. Apple foresaw the change years ago when it dumped "Computer" from its corporate name and now it's selling more than 20 million handsets a quarter, punking competitors and Wall Street.
These are the sorts of disruptions Motley Fool Rule Breakers chief David Gardner bets on, usually with great success. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by investing in and holding innovators for the long term. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that my similarly styled tech portfolio will achieve similar results.
Now let's move on to the rest of today's update:
- IBM walloped Street estimates with $3.09 in adjusted earnings per share on $26.7 billion in second-quarter revenue, an 18.4% gain over last year's $2.61-per-share performance. Analysts had been expecting $3.03 a share. Thanks to the beat, the stock trades within spitting distance of its 52-week high as of this writing.
- Under attack from competitors, Akamai reports second-quarter results after the bell Wednesday. Wall Street is looking for $0.36 in adjusted earnings per share on $280 million in revenue.
There's your checkup. See you back here over the weekend for more tech stock talk. In the meantime, don't forget to keep up with my tech portfolio by adding these stocks to your watchlist today: