Microsoft Corporation (MSFT), Nokia Corporation (ADR) (NOK): Where You Don’t Want to Be: The Microsoft Keiretsu

HP is trying to distance itself from Microsoft Corporation (NASDAQ:MSFT) in the cloud, building its HP Cloud on OpenStack, the open source cloud infrastructure, rather than Microsoft Corporation (NASDAQ:MSFT)’s own Azure. But the cloud is becoming an increasingly competitive marketplace – Nebula recently introduced a $100,000 device that can do the whole work of a cloud. That’s the kind of product Hewlett-Packard Company (NYSE:HPQ) itself should have been introducing.

HP has been focused inwardly for years now, and news that CEO Meg Whitman now reigns supreme there, having pushed out board chairman Ray Lane, would seem to be good news. But Whitman herself has said that an HP turnaround will take a few years.

I don’t think the market will wait that long. HP is vulnerable to a takeover at its current price, and that’s the only hope I can find for the stock.

Nokia Made a Bad Choice

Nokia Corporation (ADR) (NYSE:NOK) made a highly publicized decision to tie its future to that of Microsoft’s Windows Phone, after its own Symbian feature phone started fading in the harsh light of Apple Inc. (NASDAQ:AAPL)’s smartphone revolution.

You can argue that CEO Stephen Elop had no choice. He was a former Microsoft executive, and his charter was to rebuild Nokia into the mass market powerhouse it was early in the last decade. Making Nokia the home of Windows Phone was the natural choice.

But it was the wrong choice. Nokia Corporation (ADR) (NYSE:NOK) has been forced to shutter its flagship store in Shanghai and analysts are cutting their ratings, while hoping against experience it can hold a level of $3.50/share. This was a $40 stock in late 2007.

In fact, Elop did have a choice. He could have worked to create specialty markets around something like Google Android. Phones designed around specific verticals remain a great opportunity, and Google is now the dominant smartphone OS with a market share of over 50%.

But Elop took the road less traveled. And shareholders are going to suffer for it. The situation is so bad I’d consider shorting it. If you are stuck with some shares, some options to the downside might recoup some of your losses.

The Foolish Play

With any tech investment, look at who they’re following and, if they’re the leader, how secure their lead really is. Be prepared to bail on evidence of weakness. These are not the kinds of stocks you can usually buy-and-hold for a generation. They must be watched carefully.

Dana Blankenhorn has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.