{"id":29278,"date":"2012-04-24T11:43:21","date_gmt":"2012-04-24T15:43:21","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/04\/could-oracle-be-the-next-ibm\/"},"modified":"2012-04-24T11:43:21","modified_gmt":"2012-04-24T15:43:21","slug":"could-oracle-be-the-next-ibm","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/04\/24\/could-oracle-be-the-next-ibm\/","title":{"rendered":"Could Oracle Be the Next IBM?"},"content":{"rendered":"

Article by Investment U<\/a> <\/p>\n

\"Could<\/p>\n

Most of the major tech firms \u2013 Oracle (ORCL), EMC (EMC), Hewlett-Packard (HPQ), Dell (DELL) \u2013 continue to take steps toward looking more and more like IBM.<\/p>\n<\/div>\n

On January 22, 1984, Apple ran a television commercial introducing the Macintosh computer during the broadcast of Super Bowl XVIII. Inspired by George Orwell\u2019s book 1984<\/em>, a woman hurls a sledgehammer through a giant screen \u2013 in a fiery explosion \u2013 where a \u201cBig Brother\u201d figure is speaking to a bunch of nameless, unemotional faces.<\/p>\n

The takeaway was, of course, that IBM<\/strong> (NYSE: IBM<\/a>) was taking over the world. Buying a Mac would show off your individuality and support of independent thought.<\/p>\n

That commercial was one of the most memorable and successful of all time. If the spot ran today, few would assume that the Big Brother character was IBM. A more logical assumption would be that it was Microsoft, Google, Facebook or, ironically, Apple itself.<\/p>\n

Fact is, to this day, IBM remains firmly entrenched as the leader in enterprise technology. Its full-year sales \u2013 in the neighborhood of $100 billion \u2013 trumps the GDP of roughly 120 countries of the world.<\/p>\n

It\u2019s like a virtual Wal-Mart of information technology. In other words, when looking to fill technology needs, a Chief Information Officer is almost guaranteed to do business with IBM in some capacity.<\/p>\n

\u201cNo one ever got fired for going with IBM,\u201d goes the old corporate adage.<\/p>\n

But that doesn\u2019t mean an up-and-coming innovator can\u2019t grab a nice chunk of market share. And earn us a fat profit along the way\u2026<\/p>\n

This Thoroughbred is Fast\u2026<\/h2>\n

Most of the major vendors in this space \u2013 Oracle<\/strong> (Nasdaq: ORCL<\/a>), EMC<\/strong> (NYSE: EMC<\/a>), Hewlett-Packard<\/strong> (NYSE: HPQ<\/a>), Dell<\/strong> (Nasdaq: DELL<\/a>) \u2013 continue to take steps toward looking more and more like IBM. I realize that\u2019s a bit counterintuitive. I mean, most \u201cinnovators\u201d innovate. So why in this case is the course of action to mimic the leader?<\/p>\n

Simply put, the strategy works. For starters, IBM has the broadest product portfolio, which enables its sales force to sell complete solutions. It\u2019s akin to firing a shotgun versus a competitor\u2019s rifle.<\/p>\n

An IBM sales representative can combine many products and address a slew of customers\u2019 needs with a single deal. Niche competitors must identify a sole need and provide a single solution, repeatedly. A shotgun always has a better chance of hitting the target.<\/p>\n

More favorably still, with such clout, the IBM sales team bypasses mid-level managers, going straight to the top \u2013 the CEO or some other person with the name \u201cChief\u201d in their title \u2013 to make the sale.<\/p>\n

Big Blue is the standard-bearer. Period.<\/p>\n

That being said, as an analyst embedded in the industry for 14 years, I can tell you that a handful of companies are beginning to close the gap in the race to rival IBM. I already mentioned the major horses in the field.<\/p>\n

To the winner will go the spoils \u2013 incredible share price appreciation in the months ahead. So envy the investor who knows how to handicap this race. He\u2019ll be the one cashing the winning ticket, as the others rip up theirs and order another beer. Who would you rather be?<\/p>\n

Get Your Bets Down\u2026<\/h2>\n

Oracle, Cisco and EMC have the talent, the expertise, and the willingness to make the needed changes to make a run at the finish. Hewlett-Packard is coming off significant changes and is well positioned, but likely lacks the resources to make a strong closing run. Dell is simply in a race above its class.<\/p>\n

Leading Contenders (\u2026And the Morning Odds)<\/strong><\/h2>\n

Oracle<\/strong> (3:1)<\/strong> – With its acquisition of Sun Microsystems now complete, Oracle is a new player in the race to rival IBM. The company and its famous jockey Larry Ellison, have shown a willingness to make major splashes through large acquisitions. While new to this class of race, make no mistake, this horse knows how to win.<\/p>\n

Bet on Oracle because it has the best chance of transforming itself into a bigger, broader entity.<\/p>\n

EMC (5:1) – <\/strong>EMC is missing too much to be a serious contender. It lacks the services division and the systems divisions to go toe to toe with IBM.<\/p>\n

EMC\u2019s best strategy would be to cozy up nicely with Cisco. The companies enjoy a good relationship, but I would wait to see what happens before placing a big bet on EMC in this race.<\/p>\n

Hewlett-Packard (10:1) – <\/strong>Hewlett-Packard already resembles IBM. That\u2019s why they won\u2019t surprise anyone and are unlikely to win at the end. A good company, yes. A good stock \u2013 sometimes. But the winner in this<\/span><\/em> race \u2013 unlikely. Throw in a couple of years of management upheaval, and it would be amazing if this horse still knows what it was bred for.<\/p>\n

Dell (50:1) – <\/strong>Dell is probably in the worst shape on this list. It may actually try to make a run at this strategy (the acquisition of Perot Systems a couple of years ago is an example) but it\u2019s in no position to make a serious run. Dell would be better off wearing yellow \u2013 and staying afraid of the big boys. But it may not, and it may try to make a run. And if it does, it will not succeed. This company is beginning to understand the value of having a software portfolio, but this is potentially too little too late, at least for the foreseeable future.<\/p>\n

IBM (even money, 1:1) – <\/strong>IBM shares have recently hit all-time highs. The strategy works. Even with a new CEO the firm is unlikely to be de-railed. In the race to \u201clook like\u201d IBM, is there anybody in a better position than Big Blue itself? Let the others try \u2013 they may have some success. But it will be IBM standing alongside any of the winners listed above.<\/p>\n

Good Investing,<\/p>\n

Gary Spivak<\/p>\n

P.S.<\/strong> Although I think IBM is probably the safest play here, there\u2019s one stock I think is better suited than the ones I mention above in challenging Big Blue.<\/p>\n

To find out the stock I\u2019m recommending to Investment U<\/em> Plus<\/em> subscribers today, click here<\/a>.<\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Article by Investment U Most of the major tech firms \u2013 Oracle (ORCL), EMC (EMC), Hewlett-Packard (HPQ), Dell (DELL) \u2013 continue to take steps toward looking more and more like IBM. On January 22, 1984, Apple ran a television commercial introducing the Macintosh computer during the broadcast of Super Bowl XVIII. Inspired by George Orwell\u2019s … <\/p>\n

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