Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Are Apple, Tesla, and Bitcoin Entering Market Technical Excess Top Phase? - 18th May 21
Gold Watch Out as Price May Be Staging New Momentum Base In Preparation For A Big Move Upwards - 18th May 21
Why the Demand for US Real Estate Licenses May Soon Fall into a Sinkhole - 18th May 21
Semiconductor Equipment Maker ASML Is at the Center of the Global Chip Shortage - 18th May 21
Could This Be The Hottest Investment Sector For 2021? - 18th May 21
TESLA Tech Stock Bubble BURSTS! Stock Price Heading for CRASH to below $400 - 18th May 21
The Most Exciting Biotech Stock Of The Year? - 17th May 21
Gold Mining Stocks Fundamentals - 17th May 21
Junior Gold Miners Should be Rallying – What’s Holding Them Back? - 17th May 21
Stock Market - Should You Be In Cash Right Now? - 17th May 21
Learning the Financial Markets - 17th May 21
Is Stock Market Selling Madness About Over? - 16th May 21
Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
Budgies Birds of Paradise Indoor Grape Vine Singing, Chirping and Flying Parakeets Fun 3D VR180 UK - 16th May 21
Wall Street Roiled by Hot Inflation Data: Is This REALLY “Transitory”? - 16th May 21
Inflation Going Stag - 16th May 21
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Time to Turn High-Tech "Rust" into Gold

Companies / Tech Stocks May 09, 2014 - 01:38 PM GMT

By: Money_Morning


Michael A. Robinson writes: As a tech analyst I spent my early years in Detroit, and I know a lot about the Rust Belt.

In fact, when I moved to the West Coast in the mid-1980s, I drove a Honda that had already started rusting. Every once in a while, some wag would come up and ask if I was from the Midwest.

No doubt, rust like that was obvious. But in my more than three decades of working with Silicon Valley companies, I've found high-tech "rust" may be a lot less obvious and much more insidious.

The good news is that while this "rust" often takes down companies, it happens to be setting up three cash-generating firms that are handing us a big opportunity now...

How Rust Created Huge Profits for the Next Generation

When I say high-tech rust, I'm talking about firms that have stayed with an old line of business or an ingrained management style that causes them to miss huge shifts in the ever-changing tech landscape.

Of course, by its very nature, technology's relentless pace of innovation means once-great leaders can suffer blows that turn out to be fatal.

Wang Laboratories was one of the hot computing companies of the late 1970s and early 1980s. But in just a few years, the company went from running Super Bowl ads to filing for bankruptcy protection.

The story is even worse for Eastman Kodak Co. (NYSE: KODK). It actually invented the digital camera back in 1974 but instead focused on its thriving film business - until it was too late.

Kodak filed for bankruptcy protection in 2012 and emerged last year as a publicly traded firm.

But here's the thing. Even the rustiest of companies, the ones who have missed opportunity after opportunity to shift with the market, can still recover and flourish once again.

So, today, I want to take a look at three leaders that are cleaning off their rust to offer investors market-beating gains. Let's start with one of the oldest tech firms around.

Rust-Buster No. 1

Big Data

International Business Machines Corp. (NYSE: IBM) has worked for years to cut its dependency on hardware sales and transform itself into more of a global leader in software, services, and other growth sectors.

As a long-time defense analyst, this is something I have tracked for years because IBM is such an important federal contractor. I've even spoken with the head of the company's federal operations.

This was after IBM sold its sinking PC business in 2005 to Lenovo Group Ltd. (OTC: LNVGY). That was clearly an important break from the past for a tech leader that traces its roots all the back to the 1880s.

But it simply wasn't enough...

In this year's first quarter, sales at its systems-and-technology division, which includes its hardware business, dropped 23% to $2.4 billion. That marked the 10th consecutive slide in sales for that division.

So, it's a good thing IBM dumped another hardware unit earlier this year when it sold its low-end server unit to Lenovo for $2.3 billion.

Now, IBM's rust buster should be obvious - Big Data. This is a field that makes sense out of mountains of raw unstructured data to reveal things like online fraud, how to make homes more energy-efficient, and how to improve sales for large companies.

It seems like a natural fit. IBM pioneered data management during World War II and is looking at a huge market. IDC, a data analysis company, says Big Data and related analytics were largely responsible for the software industry's 4.5% growth last year to $369 billion.

Thus, new CEO Virginia Rometty has a clear mission: turn IBM into a Big Data powerhouse.

Investors think she has a good plan. IBM is up 7% over the past three months and poised to go higher. We're looking at some great return potential here by year end.

Rust-Buster No. 2

Cloud Computing

Since the late 1970s, Oracle Corp. (NYSE: ORCL) has remained at the forefront of leading-edge software development.

And that was the problem...

Simply stated, Oracle was late in shifting to the high-growth market of web-based cloud computing, in which clients pay vendors to host data and applications at remote computing centers.

Indeed, CEO Larry Ellison made waves in 2009 when he lampooned the cloud market as a lot of hot air. A video of Ellison's sarcastic remarks made the rounds on YouTube, which ironically enough is owned by Google Inc. (Nasdaq: GOOG), a bona-fide cloud leader.

Ellison actually added rust to his company in 2010 when he bought server maker Sun Microsystems Inc. It took nearly four years for Oracle to show any improvement in hardware sales.

That came in its recent earnings release for the fiscal third quarter when hardware sales grew 8% to $725 million.

More to the point, however, Oracle showed a huge increase in cloud-related revenue. Sales from cloud software subscriptions jumped some 24% in the quarter to $292 million.

Not only is that a huge increase, but that's a $1.2 billion annual run rate. And it also shows Oracle's potential rust buster - more cloud sales.

They still only equate to about 3% of Oracle's total revenue.

Oracle is on the right track with its move to the Cloud and has a lot of upside ahead in that sector.

Investors applaud the move. Oracle is up 10.03% over the past three months - not off the charts, but a rate of return that projects some great profits by year end, as I think it will.

Rust-Buster No. 3

Wearable Tech

For its part, Intel Corp. (Nasdaq: INTC) has struggled with the shift from PCs to mobile devices. Ironically, it was the firm's state-of-the art technology that held it back.

For decades, the Silicon Valley legend has pushed the boundaries of small-chip architecture. It's almost always first to market with semis that offer the most processing power available because it can put billions of transistors on a chip smaller than a postage stamp.

Trouble is, those powerful chips drained batteries and run hot, exactly the opposite of what's required for smartphones and tablets.

Here's what Intel's up against. Gartner says that in this year's first quarter, global shipments of PCs totaled 76.6 million units. But that's less than one-fourth the nearly 334 million smartphones and tablets shipped during the period.

Since Intel largely missed the mobile revolution, new CEO Brian Krzanich's has a different rust buster in mind - wearable tech.

Krzanich created a stir at the Consumer Electronics Show earlier this year when he displayed smart earbud technology as well as a baby monitor that can communicate with a coffee cup embedded with an Intel chip.

He also recently bought privately held BASIS Science Inc., the designer of what the company calls the world's most advanced wearable health tracker.

From an investment perspective, Intel's moves into mobile and wearables are paying off. It's outperformed the broad market by nearly 50% over the last three months with profits of more than 9%.

As you can see, all three of these leaders prove that companies who let years of rust develop can shake it loose and thrive once gain.

To do so, they need good leaders, a solid plan, and a clear focus on growth markets.

And over the last several weeks, all three have rewarded investors by delivering gains that have simply crushed the overall market.

Source :

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in