Four Big Tech Companies That Should Age Gracefully - Barron's

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At Middle-Age, Tech Giants Strive for Consistency by Mark Veverka

Summary: Slowly and steadily, the big cap technology companies are taking their seats in the arena of traditional industrial stocks, renowned for their predictability and stability. Such giants as Cisco (CSCO), Microsoft (MSFT), and Hewlett-Packard (HPQ) can get more comfortable with their girth, saving a special place for Apple (AAPL) too. HP has earned its place among the big boys thanks to sound performance in almost all its divisions, constantly sharpening operations for top-notch efficiency. The company's goal of 4-6% revenue growth may be met if sales continue to be very strong, but obstacles include a disappointing high-end server business, competition from Dell (DELL), and inventory glitches. Cisco has cause to boast: Diversification into home networking and video set-top boxes is starting to prove itself; the network switch and router business is poised for double-digit, long-term growth; and video-over-internet should drive consistent demand for networking backbone. Apple is pumping the June release of the iPhone as the next big wave, following the success of the Mac and the iPod. Macintosh sales continue to grow, while the road from iPod to iPhone could be a somewhat bumpy one. As for Microsoft, although Vista hasn't been snatched up as previously anticipated, analysts expect a pick up later in the year and remain optimistic. Bottom Line: "Investors should realize that big-tech now offers predictability in their portfolios. Goldman likes HP, Cisco and Apple."
Related: Apple: Mac Sales Accelerated in January • How Apple’s iPhone Could Flop • H-P's Earnings Beat Estimates But Concerns Remain • Hewlett-Packard: Back in the Game • Is Cisco Slowing Down? • Windows Vista: Not Exactly Selling Like Hotcakes at Amazon

HPQ vs. CSCO vs. AAPL vs. MSFT 1-yr chart

Comments

[Julian Ivan...:]

AAPL isn't "aging." Its growing at 30-40% YoY, and will continue doing so for the next 3-4 years.
HPQ? Doomed to middle age, laucklustre growth, and falling margins.
MSFT? Well past its prime, circa 7 years ago. Coincidentally about the same time DELL peaked.
CSCO? Undervalued, good solid play, but no sprinter.
The only growth story here is AAPL. Yet AAPL trades at 22x forward earnings. I know where I'd put my money.

2007 Mar 04 01:28 PM