Out of even the most tragic of circumstances, some opportunities may arise. One thing that the recent terrorist activity at the close of the April 15 Boston Marathon highlighted is that as helpful as the public was in going through countless photos, inaccuracies launched incorrect identifications. However, technology does provide an answer.
One privately-held company called CrowdOptic provides market-based solutions to advertisers in large venues, such as stadiums. However, that same technology, using algorithms and related formulas to assist in identifying and catching the perpetrators of the Boston incident, may have even broader applications going forward; the technology may be plenty broad enough to attract the attention of large computer hardware and software companies. I am going to look at a few of the large players in these industries, most of which have pristine balance sheets that would enable cash purchases.
Oracle Corporation (NASDAQ:ORCL) is a global hardware and enterprise software producer and retailer. In 2012, 57% of the company’s sales were from outside of the U.S. Oracle Corporation (NASDAQ:ORCL)’s most recent quarter, the second quarter of its fiscal year, was a bit of a disappointment. Revenue came in at slightly under $9 billion and earnings were $3.1 billion, or $0.65 per share. Analysts had been expecting earnings of $0.66 per share on revenue of about $9.3 billion.
The reason given for the shortfall had to do with several thousand new salespeople being unable to close deals, a situation that one assumes was remedied in the current quarter. Perhaps for that reason analysts look for a very strong third fiscal quarter, with sales of $11.3 billion and earnings of $0.88 per share.
Oracle Corporation (NASDAQ:ORCL) has a fairly heavy debt load due to its many acquisitions. That debt equals some 42% of capitalization. But cash on hand is also heavy at over $33 billion. Share price weakness brought on by the disappointing quarter has brought the PEG down to a reasonable 1.1. I see Oracle as a slow-growth company, and suitable therefore to risk-averse owners.
Hewlett-Packard Company (NYSE:HPQ) did something in the first fiscal quarter of 2013 that largely escaped the company in 2012; it earned money. Specifically, earnings came to $1.2 billion, or $0.63 per share. In the rear view mirror are last year’s massive write down from its Autonomy purchase and a variety of other write downs. Now the issue becomes whether or not Hewlett-Packard Company (NYSE:HPQ) can earn the sort of income it was making last decade. Trends are not favorable, as shipments worldwide fell from 15.7 million in the first quarter of fiscal 2012 to 12 million in the first quarter of 2013. Market share fell from 17.7% to 15.7%.
Looking ahead, Hewlett-Packard Company (NYSE:HPQ) continues to update and introduce new products. But there is little sign that true product revenue growth will occur. As for Hewlett-Packard Company (NYSE:HPQ) growing its enterprise business, I see it as having both far larger (International Business Machines Corp. (NYSE:IBM)) and more savvy (Oracle, among others) enterprise competitors, and the growth of that end of Hewlett-Packard will be difficult to achieve. The company also has “just” $12.4 billion cash on hand, compared with over $21.7 billion in long-term debt. Hewlett-Packard is not for me.
One big, but often overlooked tech company I have had my eye on is SanDisk Corporation (NASDAQ:SNDK). It manufactures flash drives, storage equipment, and related computer and smartphone parts. Its products are increasingly being used by new lightweight tablets with solid-state drives. SanDisk Corporation (NASDAQ:SNDK) is a leader is solid state hard- drive technology.