Buying your own stock is easy after a 10% decline. Throwing free-cash flow into a fat dividend for your shareholders is easy too. Cutting employees, managing costs and deleveraging a balance sheet takes skill, but is an easy way to support a stock price. It’s not a time for easy, it’s a time for hard.
I’m looking at you AAPL, IBM, INTC and HPQ. There are others but these are four of the larger culprits. I like that you guys sport a nice yield, buy back shares and have nice cash flows, there’s a spot for a stock like that in every portfolio, but YOU’RE TECHNOLOGY COMPANIES. It’s time for a “moonshot” and no I’m not talking about a server system HPQ, nice try though.
You are four of the greatest companies this country has ever seen and you’re certainly not going anywhere anytime soon, not by a long shot. But why not dare to be great again? Why not set a goal that seems so lofty, so daring, that it will take every man woman and child tied to your corporate structure to get there? In case you haven’t noticed, investors like that.
Tim Cook knows this. He was surprised his stock fell after record earnings and revenue forgetting about his weak forecast and continued vagueness on new products. It’s ok to let people know what you’re working on, Cronkite didn’t just appear on television one day and say, “Good afternoon ladies and gentlemen, we’ve landed on the moon...SURPRISE!” Think different AAPL, write that down, it sounds like a good ad campaign.
I think there are new products coming, so spend some cash elsewhere. Instead of focusing on what might have been with TWTR or NFLX, even Nest, why not just take out Pinterest right now? While you’re at it, throw in Square, I think one of your board members can get Jack Dorsey’s phone number as long as he’s not “frozen” from negotiating any possible terms. You could pick those two up for the cash flow from one week of holiday sales. Maybe it doesn’t work, the horror, there have been failures in this company before and you’ve bounced back quite nicely. You’ve upped your cap-ex spending, I like it, but the largest company in the world needs to do more. Period.
Oh HPQ, i know Mark Hurd turned you into a cash machine and cut research and development to the bone. I get it, believe me, all the employees in my area almost blame Hurd exclusively for the issues that nearly crippled the company. But Meg Whitman has the ship on the right course, the engine and rotors are sound, time to spend some money on a wave pool.
I’m not talking about a tablet or phone, I’m talking about printing chocolate bars. Take one of these 3D-printing companies out or release your version already. You have the distribution network and financials to get a 3D printer in 1/3 homes by 2025. Start working on it, like yesterday.
That brings us to INTC, one of the best cash-flow stories around. I use the stock like a high-yielding savings account today, my roommate's dad used it to get rich in the 80’s and 90’s, tomato-tomata I guess. You don’t need a 4% dividend and squeezing every penny out of your factories is nice, but how about a new chipset?
You missed mobile, ok, what’s next? Driving while looking in your rear-view mirrors, you’re more likely to crash than get where you’re going. As the late, great Harold Ramis penned, “Check your mirrors, side of the eye, side of the eye.” I hear wearables might be catching on, here’s a thought, how about a chipset that can run on solar power? Seems useful if people are wearing it on their wrist outside. That’s ridiculous! No, that’s hard. Have a better idea? Great! Throw some money at it.
Finally, IBM, where have you gone? You certainly successfully reinvented yourself once so why not again? In case you haven’t figured it out, you’re the only buyer of your stock, stop buying it and throw Watson a bone. DUMP EVERY PENNY into that while you can. In case you haven’t noticed, inventory management is pretty critical in retail today, an artificial intelligence assistant may help some companies remain lean in a challenging industry. Trying to assist in cancer diagnosis is nice, but doctors have huge egos. Doctors don’t want to take advice from a machine or more specifically, help it to get smarter than them.
Seriously, the possibilities for Watson are endless. Stop buying these no-name cloud businesses, none of which seems to pay any dividends and turn Watson into something more than a Jeopardy champion. Watson couldn’t even figure out to jump around the board in Jeopardy to frustrate its’ opponents, so let’s focus its’ energy elsewhere.
This is a time for growth, it’s a time for an on-side kick to start the second half. FB just ran a double-reverse throwback pass to the quarterback and investors have rewarded them. I realize the easy play is off-tackle, instead, throw it deep. Take a shot, a moon shot. Not because it is easy, but because it is hard.
Long AAPL, INTC
Long IBM OTM puts