Jubak's Jewels: A Tech Trio
02/25/2005 12:00 am EST
Jim Jubak, senior markets editor for CNBC on MSN Money, is always among the most popular Money Show speakers. At a special panel on technology investing, the financial commentator discusses a trio of his favorite long-term technology plays.
"Avaya (AV NYSE) has been a terribly run company for quite a while, and it’s struggled under a lot of debt. However, it now has a management that seems to 'get it'. The company has been expanding outside the US for the first time since it was spun off from Lucent. Meanwhile, its equipment fits a really important niche right now in the transition from our current phone systems to a Voice over Internet Protocol, or VoIP. Rather than rip out your old phone system and start over from scratch, Avaya's products allow companies to salvage some of their old system while shifting to VoIP. So it’s a good transitional technology for a time when companies are looking to go a little more slowly into VoIP.
"EMC (EMC NYSE), a data storage company, is a really interesting stock. EMC had a great fourth quarter, yet the stock went down, when investors noticed that the company was selling a lot of systems designed to be cheaper entry point systems. These days, hardware technology companies face a lot of of competitors that are willing to cut prices to get into your business. To compete, you can develop cheaper versions of your own products or let others cannibalize your margins. EMC chose the former strategy. This was an intentional decision. In my opinion, this is a stock that should do very well when capital spending picks up later in the year.
"L3 Communications (LLL NYSE) is involved in what is called secured high data rate communications. They are in the business of sending digital signals very, very fast and very securely from one part of the military network to another, as well as inside various corporate networks and for homeland security. The stock has been hammered lately because of worries over the defense budget. But I don’t think there’s a real worry that defense spending is going to go down. They are a high tech leader with lots and lots of really high profit niches.
"I also like Yahoo (YHOO NASDAQ), due to Internet advertising. I'd note that I work for Microsoft and we compete against Yahoo. They are tough, resourceful, and fast off the dime. I hate competing with them. But this is a nice stock to own. They, like Microsoft, have been a little slow to discover that search was going to be the biggest driver of Internet advertising. But it is now rolling out its new search engines, adding more and more search capabilities, and closing the gap with Google. Internet advertising is back, and companies that can deliver targeted Internet advertising, such as Yahoo, will benefit."