The Blog of Evermore

Update on Recent Activity

July 20th, 2011

On February 27th, I posted that I had taken up positions in three new stocks (Exar (EXAR), Biosante (BPAX), and Comverge (COMV). Thus far, the three have each gone their own way. As of today, EXAR is up 2.2%, BPAX is up 91%, and COMV is down 47%. Fortunately, I took more substantial positions in BPAX and EXAR.

The sell-off in COMV has subsided and it probably is not a bad time to accumulate some shares as the downside should be limited with a high probability of being able to turn a profit. While I have been tempted to do so, I have resisted because of the tentative nature of the global economy and because I think there are better places to put money to work. I will hold onto the small stake I have because of what is now a low risk holding and the fact that at this price COMV could be takeover candidate.

I have recently shifted some money around by selling a portion of my holdings in the following:

AT&T
Bristol Myers Squibb
CalAmp

I still hold positions in these companies but I wanted to take some profits and take up some new positions. At the time of sale, I was up over 50% with CalAmp, 25% with AT&T, and 13% with BMY. Those figures are excluding dividends received.

I am still maintaining a sizable cash balance as I’m not convinced that the dual threats of the European Union difficulties and the impact of state and local budget cuts are priced into the market. As I commented last August, state and local governments are continuing to cut to the bone (and into the bone), and this will continue to be a drag on the economy. Add to this the moribund housing market and all is not well for non-Apple shareholders.

This does not mean that I am cowering on the sidelines. I have recently taken a position in Nokia. I plan to dollar cost average into it. I wanted to take advantage of the recent dip (I bought in at $5.84), but did not want to commit too much, too early as Nokia’s earnings announcement tomorrow will probably not be well received. My thinking on Nokia is as follows:

It is not unusual for technology companies to fall out of favor. History is littered with such companies (Digital Equipment Corporation, Compaq, Dell etc.). Sometimes technology companies never recover from the forces that caused them to fall out of favor. Eastman Kodak is a current example of this. They ran into a brick wall of change and despite fighting admirably, have found that their nascent recovery entering the digital camera market is now being threatened by consumers increasingly relying on their smart phones for snapping pictures. But sometimes, companies do pull themselves up, it just takes time. Remember the early 90’s when IBM was written off? IBM’s stock fell from around $98 to $40 between April of 1992 and July, 1993. Today, the stock sits at $183. And in a now legendary turn of events, Microsoft purchased $150 million of Apple preferred stock to help keep a struggling Apple afloat; only to be surpassed in market value in 2011.

There is definitely risk with Nokia. The iPhone and Android are practically the only game in town in the smart phone marketplace. However, Nokia has one thing going for it that a company such as Research in Motion does not: their relationship with Microsoft. I know, I know, you are probably laughing right now about the Windows 7 phone. Yes, its footprint is non-existent at the moment. But I believe this will change with time. In fact, my delving into Nokia has also awakened me to Microsoft. While the general feeling is that Microsoft was yesterday’s technology darling, the people in Redmond have made some strategic moves that are not readily apparent but could set themselves up nicely down the road.

1. Microsoft gets royalties from every Android phone sold.
2. Microsoft has stakes in Facebook & Comcast.
3. Microsoft recently acquired Skype.
4. Bing is slowly making inroads in the search market.
5. Apple is aggressively going after manufacturers of Android via patent suits and at a minimum, may be able to extract royalties for each Android phone sold and could potentially inflict even more damage to the platform.
6. Google is under further pressure regarding their Android operating system due to a suit being brought by Oracle, seeking damages related to Java patents.

All this could add up to disruption to Android manufacturers or at a minimum, increase the cost of the phones, making a Windows 7 phone more appealing.

So the Windows phone is not dead. I would argue that it really hasn’t gotten started. From what I hear, Windows 7 is very sleek and user friendly. Could Microsoft find themselves in the same position as Apple was in for all those years, having a superior product that no one took seriously? If so, will they be able to forge a market for the phone?

Of course the Windows phone can be successful without Nokia benefitting, but it’s likely that the fate of both will be closely linked. A week ago, every article I read was that Nokia was dying. “Stay away”.. “it’s just in the process of experiencing a slow death.” When things are this dire, it often can be a time to buy. Interestingly, I’ve been meaning to blog on Nokia for about a week now, and starting just a day or two ago, I’ve been seeing some more positive press as Nokia’s earnings date nears. I’m hoping Nokia dips further after this earnings release because I think it will be at least 24 months before the verdict is in on their turnaround hopes and like I said, I’m in accumulation mode.

On a final note, I recently doubled my position in Corning as it dropped precipitously down under $17. As it turns out, I could have gotten in lower if I had waited a few days, but I’m happy getting in at &17.27. Additionally, I purchased some Cicso stock around $15.30 for my son’s college fund. And lastly, I bought a bit of a lottery ticket with Rosetta Genomics (ROSGD) – but more on that to come.

The information and opinions on this site are not meant to serve as financial advice. I am not a financial advisor. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional This site is merely intended to provide what I hope is interesting information and opinions.

Entry Filed under: Finance, Uncategorized