Not the home run that Intel (INTC) hit with its earnings but EMC’s (EMC) results back up my theory that technology hardware companies with new products offering more power at lower prices and lower operating costs will show strength in 2010 even if the economy stumbles.
In my June 20 post “There’s less bad news in IBM’s earnings than Wall Street thinks” (https://jubakpicks.com/2010/07/20/theres-less-bad-news-in-ibms-earnings-than-wall-street-thinks/ ) I argued that Wall Street had misunderstood the lessons of IBM’s and Intel’s second quarter earnings. Not all technology stocks would report better than expected results for the quarter and guide higher for the year, as Wall Street concluded after Intel’s earnings. Technology hardware companies with new products that promised attractive short-term returns, however, would do well despite IBM’s disappointing results.
Intel was one of these in my opinion. Cisco Systems (CSCO), due to report on August 11, was likely to be another. And EMC, which reported second quarter earnings this morning, would give me a quick test of my thesis.
Today’s (July 21) results from EMC support my argument, I think. The company beat Wall Street projections by a meager penny a share and revenue only exceeded expectations of $3.98 billion by a few million, although that did amount to a very solid 24% growth in revenue from the second quarter of 2009.
However, the company did raise guidance for all of 2010 above its previous projection of $1.18 share in earnings and $16.5 billion in revenue.
EMC said that it was seeing solid growth in its core storage platform with growth in sales of its Symmetrix networked storage platform up 32% from the second quarter of 2009. Gross margins also climbed—just like at Intel—and the company gained market share. Operating and free cash flow hit all time records in the year to date.
I’m not buying anything with the market so volatile and the trend still, in my opinion, pointing downward, but I am adding EMC to Jim’s Watch List with this post.
Full disclosure: I don’t own shares of any company mentioned in this post in my personal portfolio.
Ed-
I, for one, appreciate your remarks, learn from you, and would be in favor of your posting all your market moves here. Thanks!
semievolved,
Index shorts are NOT long term investments. If I hold an index short for 2 weeks, that is a long time!
As for the rest of my moves, I will remind you that Jim does this as a full time job, and has a nice website to track all of his moves for public consumption. This isn’t my full time job. However, I do try to point out my moves at least by the time I make them. I used to do it a bit more religiously, but then some people started complaining about my activities in the comment sections here, so I cut back on my posting.
I will leave it up to you and the rest of the people here: Should I post all my market moves here?
Disclaimer: If I do post all my moves, I do it as a courtesy. I am not waiting 3 days before I buy or sell. Jim has to do that as a matter of propriety. I don’t, and won’t. Jim makes money from his advice, whereas I am giving mine away for free. Caveat emptor.
Hi Ed,
Since you post your investments here to some degree, it sure would be nice if you indicated your moves before rather than after making them. Seems like just a couple weeks ago you were extremely bearish on everything except precious metals. You indicated you were shorting all the indices as I recall (for sure the american and euroean markets) as well as the euro. Since then, the euro staged a significant rally, and voila, we find out you had already gotten out of your short. Did you also sell your index shorts just in time?
People may disagree with Jim’s calls and fault his timing but he has the integrity to post all his moves before he does them, not afterwards. That makes it painfully (or happily) easy for everybody to evaluate his true performance, not some carefully chosen slice of it.
semievolved,
I got out of the euro short last week. I took a loss on that portion of my holding, although I had made enough of a profit earlier to offset it.
The problem with the euro short has nothing to do with the euro and everything to do with the dollar. Once everyone realized the U.S. wasn’t really much better off than Europe, there was no reason to devalue the euro against the dollar. Don’t get me wrong, I still think the euro is doomed, but that could take years to play out.
As for the issue of health care, paperless offices, and 1099s…
I certainly appreciate creating a centralized medical database. But it wasn’t worth the rest of the crap in the health care bill.
Paperless offices have been theoretically possible for quite some time now, yet very few of the offices I have ever been to or worked at, have been paperless, or even remotely close to it.
As for filing 1099s, I certainly hope businesses file them electronically. But I am curious who is going to look at all these records? I can’t even begin to imagine the number of individual sales that top $600 in the U.S. Even if you only enter the info into a database and run summary or exception reports from it, what does it prove? Or is this the next great jobs idea: Hire enough people to scour all those 1099s for infractions. Brilliant!
ed-
by the way, are you still short the euro? sure has had quite a run up the past few weeks. i don’t recall your ever posting that you had reduced your large short positions on that and i wondered if you are riding this one out?
1099s can be filed electronically as well – and presumably the vast majority of them will be filed that way.
because the move to paperless records systems was an important initiative/objective of the health care changes, intended as a cost-saving and care improving change. actually, obama was pushing for changing over to computerized records systems (since before the health care debate really got going) as a difficult and somewhat costly but necessary step in updating our antiquated system. it’s that kind of forward thinking outlook that is needed but there are so many entrenched interests and so much backwards thinking in whatever you look at that progress is stymied.
semievolved,
And the health care overhaul has to do with paperless offices how…?
But if you want to commend Obama’s health care overhaul, let’s commend the fact that every time a doctor performs a procedure that costs more than $600, the doctor will have to file a 1099 with the IRS. Mind you, that isn’t just doctors –anytime ANY business sells a product or service for $600 or more, they will have to file a 1099. How many trees will that kill?
off topic but vis-a-vis the paperless dr office, shouldn’t this be an opportunity to commend the obama gang and the health care rework as drivers toward paperless???? the irony of the health care overhaul is that the largest cost savings and care improvement were possible with the public option which was removed because of conservative ire, that make sense? let the flames begin – i am sure we’ll be told that the numberts were all cooked but remember the lesson of medicare (or was it medicaid) that came out saving much more than predicted, not less.
dgoedken,
I’ll have to ask my wife. If there were any, she got them.
Ed: not even paper cards to remind you/your kids of your next appt?
Nokia is almost painful to look at, and that is not even considering the disappointing earnings:
http://www.cnbc.com/id/38013312
In Jubak’s 50 Best Stocks, Nokia is the 2nd worst stock, only behind Sunpower (STP). One dying company, and one dying industry (solar power) which is being kept on life support by government subsidies. You could find two penny stocks with better prospects than these two dogs.
Off tpoic:
India won’t let foreign retailers in.
http://www.reuters.com/article/idUSTRE66L1GQ20100722?loomia_ow=t0:s0:a49:g43:r4:c0.074074:b35889224:z0
For anyone interested, here is a solid argument against dollar cost averaging by economist Steve Landsburg:
http://www.thebigquestions.com/2010/07/14/eggs-and-baskets/
In reference to ‘Full disclosure: I don’t own shares of any company mentioned in this post in my personal portfolio’.
I thought Jim owned CSCO shares in his personal portfolio. In his ‘original buy’ message, he mentioned he will be buying. Did he sell CSCO from his personal portfolio? Does he share his sells from his personal portfolio
Cool Hotl links. THANKS! (click on EMC in the article, if you missed it)
I just loved the hotlinks to the MSN stock pages back when you where with MSN Money. But its a small price to pay for the increase in posting frequency.
Thanks Again.
I wonder if network storage is just an idea that is before it’s time. Only time will tell.
On a somewhat related note, I took my kids to a new dentist last week. For the first time in my entire life, I saw a TRULY paperless office. I was quite impressed.
EMC is well-positioned to benefit from a continued migration from PC-based storage to network-based storage. My G-mail messages, for example, are network stored. Another familiar example is network-based storage of personal photos.
Where there’s success, there’s competitive interest, and potentially reduced sales and profit margins. Stay alert!
On a related note, I caught Western Digital (WDC) on a downslide today. It went down based on Seagate’s disappointing earnings report. WDC has been stealing market share from Seagate for years. WDC reports earnings after close tonight. We’ll see if I did the right thing.