International Business Machines Corp. (NYSE:IBM)
Another firm that seems to belong to another, bygone era, IBM is still a monster technology firm that’s a good investment. It’ll never be sexy, but it will be reliable. An operating margin for 2012 of 26.72% compares well with Dell Inc. (NASDAQ:DELL) (or Hewlett-Packard Company (NYSE:HPQ), frankly) and a history of making good, solid decisions supports investability. This is a tech stock for investors who don’t want to have to watch the tech sections of the news to keep reassuring themselves about their money.
IBM’s stock has roller-coastered over the last year, but it’s been outperforming the S&P over the last 3 months and up 14.3% since mid-November. It’s a good place to put money for investors who don’t want to accept a lot of risk.
Apple Inc. (NASDAQ:AAPL)
Now we get to where Dell Inc. (NASDAQ:DELL) is going to face some real sector pressure. While Apple Inc. (NASDAQ:AAPL) does make personal computers the real issue is the growth of tablet computers – in this case the ubiquitous iPad. There’s a real movement in the world of computing to move entertainment and browsing to tablets instead of desktops. If anything at all should worry the hedge funds it would be that. Yes, Dell has its own line of tablets – that use Google’s Android operating system – but how often do you hear about them?
Apple Inc. (NASDAQ:AAPL)’s stock is soft at the moment, but I think that means undervalued, not market-adjusted. I think at least half of the recent slide in Apple Inc. (NASDAQ:AAPL) stock is due to media-generated concerns and smart buyers should pick some up while it’s low. For all the talk of Apple Inc. (NASDAQ:AAPL) in decline the company still posted an operating margin of 35.30% in 2012.
Microsoft Corporation (NASDAQ:MSFT)
To make the tablet issue worse is direct competition from Microsoft. It’s clear – to me at least – that Microsoft is trying to establish its Surface tablet as the go-to tablet computer for business. Being the first major tablet to include a full set of office productivity tools onboard sets that fight up. So Dell is no only going to fight for PC business but it will also have a real fight in the tablet market if it tries to leverage its enterprise-level installs to expand its tablet presence. I think Microsoft has the muscle to win that fight in the trenches, honestly. It’ll take a lot of money, persistence, and salesmanship for Dell Inc. (NASDAQ:DELL) to get traction.
The potential bidding war for Dell is what should interest you as an investor. It’s no secret that Dell’s share value has had a rough time over the last year prior to all the talk of buyouts and bidding wars. The recent run up in value is strictly about those discussions. Otherwise, its downward slope would have continued. Now, the hedge funds looking at Dell Inc. (NASDAQ:DELL) are real players and generally know what they’re doing. The best you can do as an individual investor is to try to ride that wave with the knowledge that it might all go south if the bidders suddenly lose interest.
The article What the H… Heck Is Going On At Dell? originally appeared on Fool.com and is written by Nate Wooley.
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