Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
In the last few days, there has been a flurry of new product launches from several major smartphone and tablet makers. These manufacturers have arguably been racing to beat Apple's (AAPL) iPhone 5 to market, in part, to give consumers time to evaluate alternative options. As the names on this list are some of the most important names in technology, a review of what has been released, how it was initially received and what the investment ramifications for the respective company might be is in order. Even for those investors and consumers who have no direct interest in any of these companies or products, a review will provide a more informed basis for considering the next generation iPhone when it is released.
Google Inc. (GOOG) - Google's Motorola Mobility division announced the release of three new versions of its popular Motorola Droid Razr. The Razr M will be on sale next week in Verizon stores and offers connectivity to the LTE network, a dual core processor and a full GB of RAM. The Razr HD and Razr HD Maxx, which have been promised in time for the holidays, offers a 4.7-inch screen that stretches to the phone's edges. The HD version will give users more real estate on their screens without increasing the size of the body. Speculation about Apple's new iPhone 5 include a similar full-screen design. Google is trading at all-time highs and showing few signs of slowing down. While the company's trailing P/E of 20.7 is not outrageous (Apple is trading at a multiple of 15.9), investors should be concerned that the stock's appreciation is somewhat overdone. While Google has the potential to go much higher, an interim pullback is likely in order. The new Razrs seem to be pretty solid and should help Google when the iPhone 5 is released. Based on the overall circumstances of the stock, this product release gets a B+. Buying into this much strength has risks, but the stock is very attractive on any significant pullbacks.
Nokia Corp (NOK) - This stock got pummeled on the release of the Lumia 920 and Lumia 820. While the stock rebounded somewhat after the initial fall, only time will tell if this was a dead-cat-bounce or a meaningful stabilization. While the new devices offered some compelling features - including "floating lens technology" and "Nokia City Lens" - at first impression, the Lumia is neither an iPhone killer nor a significant threat to the series of Android options. With time, the true prowess of the phone will more accurately be judged; it was the lack of guidance on pricing and timing that may have been seen as the biggest detractor from the launch. With a dividend yield of 6.2% and a share price similar to an expensive call option, the stock is an interesting long-term speculative play. The Lumia's launch could have been handled far better and given more clarity of those issues of greatest concern to investors. Nokia gets a C.
Microsoft Corp. (MSFT) - Microsoft provided the software platform upon which the Lumia runs, so much of the above applies here as well. Where Microsoft gets added credit over Nokia is that based on the release of its new operating system; it will release its own tablet called the Surface in late October. The device is expected to be capable of running a near-full version of Microsoft Office, giving the Surface productivity potential beyond most tablets now on sale. Additionally, with a trailing P/E of 15.6 and a dividend yield of 2.6%, the company looks well positioned to perform over time. Still, Microsoft could have taken a more active role in getting important information to investors. Microsoft gets a B.
Amazon.com Inc. (AMZN) - On Thursday, Amazon released a new series of Amazon Kindle Fire products that pose one of the first serious threats to Apple's iPad since the device was released. Even the Google Nexus 7 - which has been very well received - does not boast the comprehensive arsenal that the new Amazon devices incorporate. The flag ship device, the Kindle Fire HD with 8.9-inch screen and a 4G LTE chip, will sell for $499 or $599 depending on the memory option chosen. A 7-inch version of the Fire HD will also be available, as will an updated version of the current Kindle Fire. Where the company really blows the doors off with this release is with the $49.99 per year data package that is offered for the 4G LTE models. Included for this price is 250MB of monthly download data, 20 GB of cloud storage and a $10 credit at the Amazon App store credit. The last inclusion is a brilliant move designed to stimulate growth in the company's fledgling app store. This option allows Amazon to supplement its bottom line and insulates its customers from the need to find a third-party provider for data. With a forward P/E above 105 and no dividend, the stock is pricey, but this catalyst may allow the market to overlook this. While the product release was nearly flawless, the stock has a few issues. Amazon gets an A-.
Overall, it has been a busy week in technology. While the grades vary, the common element that should not be overlooked is that this is all a precursor to the pending iPhone 5 release. This should underline that prowess of Apple in controlling these markets. While each of the above is critical for its respective company, the real test will not occur until Apple's offering is in play. School starts next week.