Tech Sector 10/30

AMD
Oct 23rd - 20.22
Oct 27th - 21.35
News:
- Nothing huge on the AMD front other than the completion of the deal to takeover ATI. www.ati.com now takes you to an AMD subpage. Also, they announced that they will be able to produce graphics and processors on the same core, which should allow them to pick up market share in the basic PC market.

MSFT
Oct 23rd - 28.30
Oct 27th - 28.49
News:
- 2006 target of 10 million xbox 360s sold by the end of the year is still holding; 6 million have been sold so far.
- MSFT posted an 11% rise in quarterly profit on Thursday.
- IE7 released recently and is doing quite well. I've been testing it for a little bit, and I believe its absolutely as good as Firefox, if not better.
- Windows Media Player 11 was also released this week, I haven't tested it yet so I can't really comment.
- MSFT announced that they will be starting a coupon system for Vista so that consumers can buy a PC now and upgrade to Vista for free or at a reduced rate when it comes out.

DELL
Oct 23rd - 23.43
Oct 27th - 23.3
News:
- Apple is now outfitting laptops with the new Intel Core Duo 2 chips which may cut into Dell's laptop sales.
- The Vista coupon system will hopefully lead to decent sales in the current quarter for Dell.

Italy-economy observations

Hey KFG,

It’s great to see all the development of the club this semester. I have been studying in Italy at the John Cabot University in Rome. It has been great-I'm learning about and experiencing a whole new culture. Here are some of the observations I've made about Italy's economy and business culture, and their contrasts to the US.

Italians are laid back and enjoy life! Every day, for a few hours, Italians take off work to eat a huge lunch and rest. Quite inconvenient if you need to go to a bank or do some errands! There are also several of homeless people and beggars in Rome, many of whom look quite healthy and able to contribute to society.

Italy's economy has been stagnant, especially since the Euro was introduced. The euro has made manufactured goods and commodities expensive and therefore exports have not experienced any growth. Italy's famous fashion and car industries are still successful since they produce price insensitive products-although they only account for a mere 2% of the economy.

The expensive euro and small amount of price insensitive industries in Italy have contributed to its inability to exploit economies of scale. 90% of Italian companies have an average of 10 employees. There is no Wal-Mart or anything close! This makes many goods relatively expensive-for instance the cheapest high-liter I could find was EU2.50.

What is great is that there is an endless amount of mom-and-pop stores with high quality products. Dining in Italy is fabulous and there is endless nightlife. Nothing beats Italy's tourist industry as well. Rome has such a fascinating history, that it often competes with modernity. For instance, there is always tons of red tape to cut through before any "modern" building can be built in Rome.

I hope this gives you a little window into Italy and its business culture and economy. I would definitely recommend studying here for anyone who is considering it. Feel free to shoot me emails at Jesse.Phillips@american.edu. I plan on posting stories on the blog in the future. If anyone has any ideas for what would be interesting to post let me know.

Technology Sector 20th Oct

Microsoft - 28.45 right around the price on the 16th of 28.48 - hovering around the 52 week high of 28.70
Some interesting news of late:
- Microsoft announced last week an expansion of its medical research mission -- the Fool believes this should give long term shareholders something nice to think about.
- Window's Mobile devices seem to be doing quite well -- the number of phones running the system doubled to 6 million in 2005. MSFT is also looking to connect windows mobile devices with Xbox Live.
- WSJ had an article last Friday about the future for MSFT being the web, and how they need to do something drastic to gain more ground.
Dell - 23.60 slightly down from our purchase on the 17th at 24.33
- unfortunately in wake of my pick Dell lost the lead in PC shipments to HP last quarter. However the lead is only 110,000. HP is experiencing massive growth in the consumer market, which isn't as profitable as the business market -- the jungle Dell calls it's own.

So AMD anyone? It is 53% off its 52 week high of 42.7 a share.

Economy - Week of Oct 15-22

The interest rates imposed by the Federal Reserve which have remained at 5.25% have finally shown an effect on the economy. Consumer and producer prices ceased to increase in September as CPI was down .5% and PPI down 1.3%. In addition, 151,799 jobs were added to the workforce in September, sending unemployment to 4.6%, down from 4.7% in August. These numbers may indicate that at the next Fed meeting the board will either hold rates for the third straight meeting or lower rates in order to help give the economy a small boost to maintain the growth that we have been seeing. Should the Fed lower rates the market will most likely continue its climb upwards due to the fact that it will be cheaper for investors to borrow. In addition, bond prices would also go up since bond prices move inversely to the fed funds rate. As for energy costs, oil prices continue to remain stable at around $59 a barrel, despite the announcement by OPEC of their plan to cut production by 1.2 million barrels a day, or 4%. These low energy costs should help growth during the fourth quarter, especially during the holiday season where consumers will have more of their income to spend on goods.

Technology Sector 10/9

Microsoft -- MSFT

Closed last week at 27.87 up .67

News of note:

Google is buying YouTube ($1.65 bill). This will give Google dominance in the online video market and strengthen their advertising revenue position. Bad news for MSFT's MSN video.

Microsoft released the final test version of Vista on Friday...now just weeks away from rolling out Vista and Office 2k7. This should cause at least a temporary upward swing in Dell's numbers, as people will be looking to purchase/upgrade PCs for the new software. I'm starting to think Dell is looking good again.

Dell

Price - 23.56
52wk range - 18.95-33.34
52wk change - (27.52%)
5 year growth rate - 11.88%
operating cash flow - $4.43B

From Morningstar:

	Stock	Industry	S&P 500	Stock's 5Yr Average*
Price/Earnings	16.4	25.7	20.8	36.5
Price/Book	15.7	5.0	4.0	15.8
Price/Sales	0.9	2.0	2.8	2.0
Price/Cash Flow	11.3	19.7	14.5	20.0

Anybody else thinking Dell looks pretty good?

Technology Sector 10/2

Hey all,

Here is my update.

Microsoft (MSFT) - $27.35

Zune The Zune mp3 player is going to cost $250 and is going to come out on November 14th. It is going to be equipped with wireless capability and it will be able to play videos. MSFT will also be offering a subscription service where users will be able to listen to 2 million songs for 14.99/month. The price makes it competitive for a 30gig player, and I think the wireless sharing and built in FM radio tuner give it a bit of an edge over the Ipod. I think Apple will be a bit scared by the Zune, mainly because of the fact that Microsoft are sure to enable the Zune to seamlessly work with the Xbox 360, Windows, and Soapbox (MSFT's Youtube killer). Just remember that Windows has a 90% share of the operating system market, this will be a big deal for the Zune.

Xbox 360 News (slightly unnecessary but I love games)
- GTA4 exclusive downloadable content
- Next Splinter Cell is 360 exclusive
- New Banjo-Kazooie (game was great on the Nintendo 64)
- Marvel Universe Online exclusive for the 360 - created by City of Heroes developer (massively popular game for the PC)
- Halo Wars in development - it is being developed by Ensemble Studios - the creators of Age of Empires
- Mid November release for the $199.99 HD DVD player add on for the Xbox 360

I think the Xbox is looking strong going into the Holiday season. I am very excited to see how this console "war" is going to pan out, but I expect both the 360 and the Nintendo Wii to come out as the winners.

Vista
Seeing as Windows/Office account for over 60% of Microsoft's revenue Vista is an extremely important new release. There wasn't anything huge related to the product in the past few weeks, but look for more information as we approach the release date.

Dell (DELL)

I had mentioned in a previous meeting that Dell is looking like a good buy at around $22/share. I'm starting to reconsider. HP is gaining on Dell, and I believe Dell's retail store move may turn out to be a mistake. Anyone remember Gateway and their retail stores? Dell is planning to open upwards of one hundred locations in the next year/year and half. I honestly don't see the added value in being able to customize a PC instore. It is not like you'll be able to walk away with your PC right then and there, you will still have to wait for it to be shipped to your house. I think perhaps waiting a few more weeks and reading some more articles about the restructuring will be beneficial.

Rob Crowther