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aaronl
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Post by aaronl » Mon May 23, 2011 1:22 am

I don't often buy individual stocks, but I did end up buying Intel and Cisco stock about a month ago. My reasoning was similar to the article's. The valuations certainly seem attractive compared to other large-cap stocks, which is especially surprising for these technology stocks.

I've been hearing a lot of the fear mentioned in the article surrounding Intel - namely that tablets and smartphones are the way of the future, and desktop and laptop computers have poor prospects going forward. I think this is very silly. Tablets and phones have different applications from PCs, and even as they become more capable, people won't want to give up luxuries like keyboards entirely. Is it even possible to set up an iPad without connecting it to iTunes on an actual computer? Also, what about the billions of people in developing countries who have never owned a computer? Even if tablets really do displace PCs, I still think it's inevitable that Intel will play a big role in that market. They have the best fabrication technology of anyone, and that's going to matter as tablets and phones get more ambitious.

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Post by Valuethinker » Mon May 23, 2011 8:08 am

Morgan wrote:
aaronl wrote:I don't often buy individual stocks, but I did end up buying Intel and Cisco stock about a month ago. My reasoning was similar to the article's. The valuations certainly seem attractive compared to other large-cap stocks, which is especially surprising for these technology stocks.

I've been hearing a lot of the fear mentioned in the article surrounding Intel - namely that tablets and smartphones are the way of the future, and desktop and laptop computers have poor prospects going forward. I think this is very silly. Tablets and phones have different applications from PCs, and even as they become more capable, people won't want to give up luxuries like keyboards entirely. Is it even possible to set up an iPad without connecting it to iTunes on an actual computer? Also, what about the billions of people in developing countries who have never owned a computer? Even if tablets really do displace PCs, I still think it's inevitable that Intel will play a big role in that market. They have the best fabrication technology of anyone, and that's going to matter as tablets and phones get more ambitious.


If something like 'surround holographic' technology (thus removing the 'limited screen real estate problem') or the iPad used a laser keyboard with a pullout flat surface to pull out (not very expensive, and a great idea), then I would be a lot more worried.

Can you imagine computer programmers or scientists tapping away on a touchscreen keyboard? The whole ergonomic issues with that seem insurmountable even from a aesthetic perspective (greasy screens..)

I don't intend to bash the iPad anymore, but quite honestly like pretty much everything else Apple markets, they are for grown up kids who want the shiny thing and want to be cool or something. That's fine for consumers, but I don't imagine I'll be seeing an iPad server farm anytime soon. Also; I can't believe the price of those damn things. This may be consumer envy on my part, but I find it very difficult to believe that anyone buying an iPad can be a techie/geek and still believe they made a good deal on the horsepower of the machine. I have a refurnished server which I use for my daily computation, which cost me just over 150 euros. I bought it 3 years ago, and it is 3x times faster than the iPad.

I'm aware it's tiny, it's a consumer product. That's precisely why Apple needs to get put back into its box. Fanboyism cannot sustain a share price forever. To say Apple could replace Intel or Microsoft is an absolute joke. The actual and intellectual capital of those two firms is enormously higher than Apples. 'Styles' by definition, are cyclical, moving targets.

Good luck Apple! :lol:


It is interesting with Microsoft, Intel and Cisco how efficient markets are.

Incremental Return on Invested Capital has been falling for these companies for years, I believe.

And, lo and behold, the market systematically derates their PEs.

Apple unusually dependent on the creative genius and inspirational force of one man, and a man who is very ill. Companies like that struggle to survive the loss of their driving force (Bell, Edison, Henry Ford etc.).

Note if you are London based, the British Library on Euston Road has a special, free, and very interesting exhibit on Science Fiction-- well worth a visit (open 7 days a week). Just some of the ponderings eg on Virtual Reality/ cyberspace (apparently William Gibson invented the term: who knew?).

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Post by KyleAAA » Mon May 23, 2011 8:33 am

I can see it. All of those companies face major challenges. Microsoft has simply run out of ways to grow its core business. Windows is already run by 90% of the planet and Office is already installed on probably 90% of office computers. They'll have to find some other way to grow, and thus far they have been completely unsuccessful entering other markets (XBox aside, which still isn't profitable I've heard).

Ditto for Intel. They've already cornered the desktop market. Mobile is the only way they're going to be able to grow earnings rapidly, but that market already has stiff competition by established players. They will probably make some headway there, but their overall market share is likely to drop as desktop and laptop's become less dominant.

No real opinion on Cisco except to say they are already so dominant I'm not sure where their growth is going to come from. Consulting or some other services I would imagine.

As for Google, well, they have serious problems too. It's not a stretch to speculate that they will have severe anti-trust issues in the near future.

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Post by nisiprius » Mon May 23, 2011 8:45 am

Morgan wrote:Good luck Apple! :lol:
Here's the funny thing. My son is an engineer-type who has consistently knocked Apple for all the reasons you mention. He also seems to regard Apple products as unmanly, a not-uncommon reaction. His employer pays for his cell phone. He once had a BlackBerry and couldn't say enough good things about it. Then, as a preexisting BlackBerry customer, three or so years ago transitioned to a new BlackBerry model that had a touchscreen. He hated it hated it hated it. Called it a "t---". Had trouble using it. Just recently he bought an iPhone. He loves it. He says it works. He says it's not a "t---".

It's not just style. Apple has had their mistakes (Newton anyone?) but they have been very good about not releasing t---s. Most of their products actually work and sorta-kinda do what you expected. Can you even imagine what could have been going on that BlackBerry could release a product that was so bad it alienated their existing customers? Apple does that less than any other company I know.

For example, you can edit video on a Mac. Well, to read the literature and the feature list you'd think you can edit video on a PC. And it wouldn't be right to say that you can't. But just talk to any ordinary consumer who's actually tried to do it, with one of the tacked on bundled-in bloatware apps.

Even when Windows has a perfectly good facility for doing something, consumers often get hijacked by bloatware. For example, Windows XP installed by itself provides a perfectly respectable way of burning CDs. But my brother keeps calling me for help because whenever he tries to burn a CD, something he calls "Sonic" keeps popping up, and "Sonic" is a teaseware package that simultaneously doesn't provide enough capability to do much, but provides enough complexity to baffle a novice. And I can't help him because the PC I have from work doesn't have exactly the same piece of bloatware on it. I believe he has managed to create a multisession CD in which every file he backs up is its own session. (I solved the problem by telling him to quit trying to back up to CD and use a thumb drive.)

What I'm saying is that with Apple, it's not just style, it's user experience, and Apple actually does a good job with that. Whether they have an unfair advantage I couldn't say, but it's a real difference. Microsoft just does not think of me as their customer, it thinks of "Dell" and "HP" as their customers. Apple thinks of me as their customer, and it shows.

If I were a techie who was just buying a box to throw away the preinstalled software and slap Ubuntu on, I'd definitely favor a PC over a Mac.
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Post by Valuethinker » Mon May 23, 2011 11:17 am

nisiprius wrote:
Morgan wrote:Good luck Apple! :lol:
Here's the funny thing. My son is an engineer-type who has consistently knocked Apple for all the reasons you mention. He also seems to regard Apple products as unmanly, a not-uncommon reaction. His employer pays for his cell phone. He once had a BlackBerry and couldn't say enough good things about it. Then, as a preexisting BlackBerry customer, three or so years ago transitioned to a new BlackBerry model that had a touchscreen. He hated it hated it hated it. Called it a "t---". Had trouble using it. Just recently he bought an iPhone. He loves it. He says it works. He says it's not a "t---".

It's not just style. Apple has had their mistakes (Newton anyone?) but they have been very good about not releasing t---s. Most of their products actually work and sorta-kinda do what you expected. Can you even imagine what could have been going on that BlackBerry could release a product that was so bad it alienated their existing customers? Apple does that less than any other company I know.

For example, you can edit video on a Mac. Well, to read the literature and the feature list you'd think you can edit video on a PC. And it wouldn't be right to say that you can't. But just talk to any ordinary consumer who's actually tried to do it, with one of the tacked on bundled-in bloatware apps.

Even when Windows has a perfectly good facility for doing something, consumers often get hijacked by bloatware. For example, Windows XP installed by itself provides a perfectly respectable way of burning CDs. But my brother keeps calling me for help because whenever he tries to burn a CD, something he calls "Sonic" keeps popping up, and "Sonic" is a teaseware package that simultaneously doesn't provide enough capability to do much, but provides enough complexity to baffle a novice. And I can't help him because the PC I have from work doesn't have exactly the same piece of bloatware on it. I believe he has managed to create a multisession CD in which every file he backs up is its own session. (I solved the problem by telling him to quit trying to back up to CD and use a thumb drive.)

What I'm saying is that with Apple, it's not just style, it's user experience, and Apple actually does a good job with that. Whether they have an unfair advantage I couldn't say, but it's a real difference. Microsoft just does not think of me as their customer, it thinks of "Dell" and "HP" as their customers. Apple thinks of me as their customer, and it shows.

If I were a techie who was just buying a box to throw away the preinstalled software and slap Ubuntu on, I'd definitely favor a PC over a Mac.


Welcome to the open system v. the walled garden debate.

Apple is a vertically integrated walled garden. Its policy towards iphone Apps the canonical demonstration of same.

The Wintel paradigm was open to applications software, and therein lies the rub.

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Post by Epaminondas » Mon May 23, 2011 11:27 am

Valuethinker wrote:Welcome to the open system v. the walled garden debate.

Apple is a vertically integrated walled garden. Its policy towards iphone Apps the canonical demonstration of same.

The Wintel paradigm was open to applications software, and therein lies the rub.


Could you elaborate on this a bit. I will be buying a comptuer soon and am torn between a PC and a Mac.

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Post by jh » Mon May 23, 2011 9:27 pm

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Last edited by jh on Fri May 27, 2011 1:32 pm, edited 1 time in total.

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Post by Manbaerpig » Mon May 23, 2011 10:22 pm

I can't speak for Intel/Microsoft like I can for Cisco (disclaimer:insider, engineering though, not finance, so grain-of-salt rules apply), but the stock @ CSCO is looking at growth rates similar to a bank for a while. Yea, not "good" in the "I'm a growth-stock baybee", but good if you think... hey we employ over 100k people, profit approx $2B per quarter, and dominate several markets.

But wall street demands $2B to become $2.1 becoming $2.2 POST HASTE, and 12-17% year over year growth while fighting off rivals, outright reverse engineering, infringement ,and problems @ scale that intel, microsoft and even IBM/HP all have. Once you're #1 in a bunch of markets it's hard to keep growing.

That being said the word is not over for cisco, yet. Lots of interesting things in the works. Good luck F5, juniper, extreme, HP, you'll need it (too). I buy through ESPP at these levels, but I'd expect the street to beat up the stock a bit more. I don't see sentiment changing until they blow out a few quarters in a row. By then it's back to $25-$30 and you missed the boat, though.

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Post by nisiprius » Tue May 24, 2011 5:42 am

Epaminondas wrote:
Valuethinker wrote:Welcome to the open system v. the walled garden debate.

Apple is a vertically integrated walled garden. Its policy towards iphone Apps the canonical demonstration of same.

The Wintel paradigm was open to applications software, and therein lies the rub.


Could you elaborate on this a bit. I will be buying a comptuer soon and am torn between a PC and a Mac.
There are no great big hugely important differences between a PC and a Mac... in the same way that there are no great big hugely important difference between a Ford and a Toyota. The big deciding factors are a) personal preference, and b) how tightly your use of the computer is going to interlock with those of other users.

If it's a home office machine, if the very essence of what you do with it involves exchanging Microsoft Word documents with other people, if you use commercial accounting packages, etc. then, regardless of the merits, you'll be creating nuisances for yourself if you choose a Mac.

A Mac actually is better in all the ways a Mac is supposed to be better, but it's a small difference.

The cost comparison is impossible; you can spin it either way. Are you going to compare a name-brand Mac to a grey-box PC from the local screwdriver shop (on the basis that you can get a dirt-cheap off-brand PC but not a dirt-cheap off-brand Mac)? Do you include the value of the stuff that comes with a Mac whether you want it or not? Do include the fact that the lowest-end Macs include the fully-featured OS and enough RAM and disk space to run them, while Microsoft allows their hardware partners to sell underpowered PCs? Do you put a dollar value on the "futz factor," the time you spend tinkering with your computer instead of using it? Is it valid to say you can keep a Mac longer than a PC before it becomes a misery due to obsolescence and version skew?

It doesn't have to be a difficult decision. If you have strong instincts in one direction or another just follow them.

When Consumer Reports rates machines... I don't remember the last set of ratings... Macs typically come out near, sometimes at the top, but if you look at the actual scores it's always in a closely grouped pack.

One tip. Or, if you like, don't make the mistake I made when we bought our last PC. Strongly consider buying something that's billed as a "home office machine," specifically one that only comes with Windows 7 preinstalled... or Windows 7 and some specifically, paid-for, big-deal thing like Microsoft Office. Windows itself is not that awful, but the bloatware and shovelware they include in a "home" system are awful. It's just a disk space issue, all the bloatware is intrusive. Things like having some third party antivirus program pop up and scare you into buying it before you have a chance to even find out about zero-cost Microsoft Security Essentials.

Oh, sorry, to address VTs point, if you don't want a "walled garden" it seems to me you want Ubuntu, not Windows...
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Post by Valuethinker » Tue May 24, 2011 7:55 am

Epaminondas wrote:
Valuethinker wrote:Welcome to the open system v. the walled garden debate.

Apple is a vertically integrated walled garden. Its policy towards iphone Apps the canonical demonstration of same.

The Wintel paradigm was open to applications software, and therein lies the rub.


Could you elaborate on this a bit. I will be buying a comptuer soon and am torn between a PC and a Mac.


1,000 debates here.

Basically a Mac has:

- a cleaner, easier to use operating system
- far far less malware (if any)
- better user experience
- higher initial cost but for most uses of a home computer, then nothing further to spend

A windows PC has:

- perfect compatibility with most major office environments. If you are interacting with a large business (or specific PC business software) you will be much better off with a PC

- ability to 'flex' what you put on it and a host of free applications out there

- a host of nasty malware, viruses etc. Constant security issues

- 'PC rot' the well known tendencies of PCs to get slower as they get older

- possibly cheaper entry price

It's not a 'one's right and the other is wrong' issue. It's a matter of your personal circumstance and your preferences.

I am a 100% Windows user, if I was just buying a home only PC, I would definitely consider a Mac.

But make sure your favourite piece of software has a version for the Mac.

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Post by Manbaerpig » Tue May 24, 2011 12:41 pm

it's actually not so simple, either

eg hackintosh ( Apple OS on PC)
eg virtualization (fusion, etc all) aka win 7 on a MAC

Apple went intel/PC based years ago, if you're open to loading software the difference isn't much more than the appearance of the laptop shell now

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Post by RaleighStClaire » Tue May 24, 2011 1:00 pm

I recently built a new computer for the first time and it was about 100x easier than I ever imagined. Took about an hour start to finish and I spent $655 for a PC that is superior in almost every way to a $1500 system that you'll buy from Dell. I don't even want to know how much a similar Mac would cost but I'm guessing $2500+.

Probably semi off-topic but I installed a SSD (solid state drive) in my new machine and it's the greatest thing of all time. I suggest anyone buying/building a new computer to make sure that they get a SSD and install their OS onto it. Computer boots up in 20-30 seconds, huge programs like iTunes, photoshop, etc. all boot up in 1-2 seconds. I never thought that something could make such a big impact to the computing experience but SSDs are going to be the home computing revolutions in the coming years.
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Post by Manbaerpig » Tue May 24, 2011 2:06 pm

Those $1500 systems from Dell are now ~$500

building a PC yourself is usually regarding getting the set of components that maximize your utility, and depending on your specifics, maximize your value (eg particular graphics card, drive, processor, better cases, overclocking, etc). Homebuilt PC's haven't been cheaper than prebuilt in probably a decade or so. That doesn't mean there aren't compelling reasons to build one yourself... but cost I do not believe is a reason. Value, perhaps.

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Post by RaleighStClaire » Tue May 24, 2011 2:10 pm

Manbaerpig wrote:Those $1500 systems from Dell are now ~$500

building a PC yourself is usually regarding getting the set of components that maximize your utility, and depending on your specifics, maximize your value (eg particular graphics card, drive, processor, better cases, overclocking, etc). Homebuilt PC's haven't been cheaper than prebuilt in probably a decade or so. That doesn't mean there aren't compelling reasons to build one yourself... but cost I do not believe is a reason. Value, perhaps.


Well, you're wrong about the price. I built my computer last month so I'm positive that I am right about the price.

How about this, of the machines most similar to mine, at Dell they are $1500 right now. Those machines come with things that I do not have any use for which have some value, sure, but to me it's 0.
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Post by Manbaerpig » Tue May 24, 2011 2:14 pm

list the specs, I'll help find a deal :)

eg I7-960, 24G RAM, 3TB drive + 160g SSD, Nvidia*.*, 800 watt PS mini-tower?

I'm positive I'm right too :) (I hang out on fatwallet)

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Post by RaleighStClaire » Tue May 24, 2011 2:35 pm

Manbaerpig wrote:list the specs, I'll help find a deal :)

eg I7-960, 24G RAM, 3TB drive + 160g SSD, Nvidia*.*, 800 watt PS mini-tower?

I'm positive I'm right too :) (I hang out on fatwallet)


X4 970, 8GB RAM, 2TB hdd, 100gb SSD, ATI 5670, 700W PS.

Looks like a similar product w/o SSD on dells site with discounts is 1250. perhaps you can find superior discounts but I scan slickdeals regularly and built my machine with components found on sale there.
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Post by 3CT_Paddler » Tue May 24, 2011 2:37 pm

RaleighStClaire wrote:Probably semi off-topic but I installed a SSD (solid state drive) in my new machine and it's the greatest thing of all time. I suggest anyone buying/building a new computer to make sure that they get a SSD and install their OS onto it. Computer boots up in 20-30 seconds, huge programs like iTunes, photoshop, etc. all boot up in 1-2 seconds. I never thought that something could make such a big impact to the computing experience but SSDs are going to be the home computing revolutions in the coming years.


I have heard SSD are great for performance, but have much higher failure rates over time. Did you do anything to mitigate that in your design? (Frequent back up, combine a hard drive disk with the SSD)

Edit: Seeing your specs answers my question. Looks like a beast of a machine.
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Post by Ice-9 » Tue May 24, 2011 2:38 pm

In response to the OP, it's interesting to see this article coming out just a couple of weeks after The Economist suggested there was actually a new tech bubble.

http://www.economist.com/node/18681576

I realize the Economist article was focusing on "out of sight" private markets, but still it's interesting to see the different views on investing in tech right now.

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Post by RaleighStClaire » Tue May 24, 2011 2:47 pm

3CT_Paddler wrote:I have heard SSD are great for performance, but have much higher failure rates over time. Did you do anything to mitigate that in your design? (Frequent back up, combine a hard drive disk with the SSD)


Yeah, I've heard about the performance failures over time as well. I can't comment on that directly since I've only owned it for a month. One method that some suggest is to only use at most half of the drive which is certainly reasonable. In practice, you don't want all that much on your SSD anyways. You want your OS, large programs like office, photoshop, etc. and that's about it. How many gigs does all that take? W7 is around 20-25GB I believe, the rest isn't much. All your other stuff can go onto your regular harddrive so over 100GB seems unnecessary. When I bought mine a month ago it was around 160 and now they are under 100. 3 years ago a 100GB SSD was $2800. I think prices are coming down!
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Post by FrogPrince » Tue May 24, 2011 2:52 pm

Actually there are two kinds of tech - the 'old guard' with huge markets and revenues to defend that are becoming more like Coke than anything else - the Intels and Ciscos and to some extent Google - and then there's the new 'five horsemen' - Groupon, Facebook, Twitter, LinkedIn and Zynga.

The article in the 'The Economist' talked about the latter in particular. All of them have significant revenues, but the expectations imposed upon them may exceed the reality of what they can achieve.

Ice-9 wrote:In response to the OP, it's interesting to see this article coming out just a couple of weeks after The Economist suggested there was actually a new tech bubble.

http://www.economist.com/node/18681576

I realize the Economist article was focusing on "out of sight" private markets, but still it's interesting to see the different views on investing in tech right now.

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