Buy Microsoft and Intel on this sell off and keep adding on the way down.Selling below money puts is one way to start. That’s a controversial call considering this photo is from the cover of this week’s Barron’s Magazine highlighting the death of the P.C. http://online.barrons.com/home-page
I’ve been one of the few people enthusiastic about Intel’s new line of sleek quick to power on Ultrabooks. The late launch of Windows 8 is undoubtedly slowing the sales cycle but still the caution of businesses and reviewers has taken me aback. I’ve paid dearly for it as every foray into Intel has been very bruising. The stock seems destined to sub 20 prices again.
Everyone knows that Intel with its 4% plus yield and its technology leadership position is a technology bell weather stock. The duopoly that Microsoft and Intel have had for nearly 30 years show signs of fray. Mobile, ARM, and of course Apple all have taken a toll. Intel was very late to the party for low power consumption processors and now may have permanently missed the boat or at least the head of the boat. Microsoft is releasing an ARM version of their Surface tablet first and it will run Office. Worse yet for Intel, Office is free. It’s important to note though that the next 3000 Windows programs won’t run on the Surface RT (Microsoft name for their tablet). There will be a Windows Intel version coming out in the next 90 days or so. Why Intel is so late is another example of myopia on their part.
Tablets apparently do replace netbooks completely but they don’t replace computers. Too many analysts are focused on the cannibalization of the laptop. I bought a tablet early on for my 13 year old son and he won’t even use it. He much prefers his MacBook Pro. I have a tablet that I use for reading and email, plane rides, reading books and some papers, but no one wants to do heavy lifting on a tablet. I’m not going to post to the Sax Angle with my iPad.
Just when things look bleakest for Microsoft and Intel, the catalyst for improvement is the greatest. Since the beginning of June 2012, Intel’s stock is down about 20% and Microsoft is down 12%. During the same time period the S&p 500 is up about 4% even after Friday’s takedown.
The reason I say that things are looking up, is that I believe Ultrabooks (basically the overwhelmingly great MacBook Air version of Windows) is going to be a huge hit and eventually replace the entire Windows notebook market. No one wants to lug a 7-8lb notebook around when they can get the same job done on one of these long battery life quick to boot-up 3lb. Utlrabooks. And if you haven’t had a chance to appreciate Windows 8 novel touch screen interface on a notebook or desktop computer, I urge you to try it. This could be a game changer for Microsoft. I believe for the first time in a decade, Apple will be copying Microsoft. The next versions of Apple’s popular notebooks and computers may incorporate touch screen as well as the traditional mouse and keyboard interface or be left in the dust.
It’s truly novel and I think it will work. Besides no one every said Microsoft gets it exactly right the first time. Their history is that they eventually do get it right but it takes a version or two. So stick around for the rest of the fight. Microsoft and Intel are definitely down but they are far from out. Betting on these high quality high dividend payers while they’re on the mat could be big returns if they can get up and last a few more rounds. Judging from my first hand experience playing with some new touch screen interface Windows 8 computers at Best Buy, there are going to be a lot of positive surprises ahead.