Broadcom

As we near the end of the month, we are entering our next sector of analysis, communications. This includes companies that provide wired and wireless services, such as the major cellular carriers; that play a major role with Internet-based broadcasting, such as Facebook; also included are producers and holders of servers and equipment manufacturers. The company we are looking at today is Broadcom Corp (BRCM).

This company falls under the "wired and wireless connectivity" label in our charts (most of the companies over the next weeks will be categorized as such) but it specializes in IP (Internet Protocol) Processors, Bluetooth technology, broadband, cable, and cellular connections (2G, 3G, 4G, and the like). Established in 1991, and currently headed by CEO Scott McGregor, Broadcom sells stocks for about $30 and proved itself as one of the more static companies; even though we made some money in our simulated investments, no significant margin for profit yet exists. First, we need to turn back the clock to the late 90's, when Broadcom went public and started trading. Like most other companies of the time, and a significant aspect of the transition, BRCM experienced the surge of the Information Era but soon fell back to 1998 levels in 2001. There was a slight spike in early 2006 due to new Fiscal Year hopes, and the same was seen in early 2011. On more recent terms, this quarter is not looking good - stocks have fallen about $2 over the past month (remember we said shares were quite stagnant). The last week of October, to explain the sudden drop, Broadcom suggested investors to buy before the earnings releases, but the earnings were significantly below expectations. Within two days, stocks plummeted from $34.11 to $31.5 (closing at $32 on the second day). We suggested our members to buy while stocks were low, following this advice ourselves, and made a profit of about $15. This is insignificant compared to higher-risk investments, but is still good for low-risk; however, we do not predict tremendous growth in the short-term, but rather expect stocks to remain in the $31-33 area. If you are interested in investing in a company that focuses on all-around communications, this is a great choice for a long-term investment.

Hostess: Tough Times for Twinkies

Welcome back, everyone! We hope that everyone has had a lovely transition into the holiday season. Among the most prominent economic events to occur as of late is the declaration of bankruptcy by Hostess Co, the food company responsible behind such delectable treats as Twinkies since 1930. Naturally, fans of the ubiquitous bakery would publicly speculate and sensationalize this turn of events. Despite this, one can deduce the cause of the fall of the Hostess enterprise based on several economic factors.
The first of these economic factors concerns an accumulation of debt by the corporation as a partial result of prior declarations of bankruptcy; indeed, the first of these manifested in 2004 due to an increase in competition with other baked goods companies such as Krispy Kreme Doughnuts. Thus, these growing financial woes pressured the company to reduce pension benefits for its employees, eventually culminating in a breach of contract by Hostess's management. The reduction of worker's pensions, like any comparable maneuver throughout history, resulted in a labor strike within the Hostess company.
 The strike served as a second major economic factor and worsened Hostess's financial crisis; likewise, a contract negotiation proposed by Hostess failed, receiving rejection by 92% of labor employees. As a consequence of the suspension of labor which the strike inevitably caused, Hostess was forced to shut down its factories and layoff most of its employees.
As may be noted, the current liquidation of the Hostess company results from not only an immense commercial debt but also a large-scale labor strike which crippled productivity. The ultimate fate of this company and its world-famous products remains uncertain, but rival baked goods company Flowers has privately expressed intentions to potentially buy out Hostess.

-Chris Cattafi, Investment Club Co-Founder and Vice President

3D Systems

Welcome back! We hope everyone (in the US) had a wonderful Thanksgiving! The company we are analyzing today has done significantly better than we expected. 3D Systems (DDD) is a 3D printing solutions company, producing printers that print 3D models/figures. This company was established in 1986 and is currently headed by CEO Abraham Reichantal. As with other companies, the stock market fluctuates, and our observations begin in mid-2011. DDD saw a steep decline with the end of 2011, but since this January has experienced tremendous growth, with a slight halt in October. At the beginning of October, 3D Systems bought RapidForm for further software tools. At the month's second peak, the 17th, the company anchored London's first ever 3D Print Show; the following week stocks flew upwards. 3D reaffirmed a buy rating on the market, raised their price target, and revenue was announced to increase by 60%. We bought ten shares in the company on Investopedia around the 12th, priced at $35.70, and before the end of the month we had made almost  $100. We were still novice to the 3D market before buying these stocks (we really bought just for analysis) but now realize that 3D printing is the true future of printing, and within the end of the decade will take a significant role in all industries. We believe that DDD will lose some value before the end of the year, but take on a similar pattern at the end of the year. We encourage to invest in 3D Systems, as they are the front-runners in a quickly growing industry!
We are very excited to say that our club is growing and that our predictions are becoming more accurate. We correctly predicted most of the tech sector we analyzed. Make sure to keep reading over the next few weeks as we jump into the Communications Sector!
UPDATE: After Monday's trading on the Stock Market, 3D Systems was shown as the company with the fourth most growth of the day; since we bought the stocks over a month ago, at $36.73, we have accumulated profits of almost $11 per share, and about $110 overall!!

Apple VS. Google

The moment you have all been waiting for has arrived. The infamous tech rivalry between Apple (AAPL) and Google (GOOG) is here. These two giants in the tech world are at the peak of their clash regarding mobile devices and software.
Apple was the first to arrive on the scene, in 1976 (incorporated in '77), when Jobs, Wozniak, and Wayne set to create the Apple 1, the first personal computer. Selling at $666.66, this was the beginning of Apple Computer, Inc. Since then, Apple has only seen growth with the introductions of Apple 2, the Mac, the iPod at the turn of the century, the iPhone in 2007 (also when the name was changed to Apple, Inc.), and the iPad in 2010. Apple revolutionized music and the music experience through iTunes and set forward a new era of mobile technology. Granted, many predecessors such as Microsoft attempted to release similar products, but all failed to satisfy the human experience Apple provided. After Steve Jobs' unfortunate death in 2011 to cancer, Tim Cook took over as present CEO. Upon looking at the stocks since the 1997 incorporation date, we noticed a pattern of pure growth within Apple's trading. What about the surge in 1999? Surprisingly, considering this company held a significant role in the Information Era, Apple saw no significant growth or downfall. Stocks continued to rise slowly, until 2007 - the release of the iPhone. By then, it was clear that Apple was the front runner in the mobile world. The 2008 Recession caused a 25% drop in Apple's stocks but since then the company has more than quadrupled those numbers and, in just four years, grew from a mere $150 to almost $750. Beginning in September of this year, stocks began heading downwards, and were down about $60. When we discussed Apple at our meeting, stocks cost $604 a piece, on Friday (11/16) they closed at $527.68. When Apple released the iPad Mini, relatively (in comparison to other Apple products) few people knew about the new device. Suddenly, when one searched on Apple.com, they found this new, smaller, and significantly unsatisfying iPad. Meant to wipe out some of the competition, this tablet did much the opposite - stocks tumbled down and prediction after prediction prognosticated significant profit issues towards losses. However, now that the stocks are starting to settle down and hit their relative minimum, they can only go up. Improvements in the 4G LTE in the iPhone will certainly boost more sales, and the spread of Apple stores in China will provide a healthy and well-needed push upwards. By the end of the holiday season, we expect Apple to push $650-700 again.
What would we do without Google? A company that made its money solely on advertising is now one of the biggest players in the mobile industry. Google was established in 1998 by Page and Brin, Stanford students seeking to bring the world's wealth of information into one place. Since then, Google has grown from a search engine to a mail server, a cloud service, a social network, and most recently a mobile operating system - Android. This was the new kid on the block, and it was a tough one. Android has now taken iOS over as the leading mobile OS (operating system); considering Android operates on plenty of different phones, manufacturers, and carriers, this is no surprise. Now, the mobile user's internal struggle fights between the Apple cult or cool new features accompanying Android phones (the Galaxy SIII on Android 4.0, to name just one). Unfortunately, what Google has in mobile growth, it lacks in stability on the Stock Market. As far as our records tell us, Google has always been very expensive and very unstable. With each major event and world crisis, Google is almost always involved and even business growth easily impacts the company's stocks. Overall, stocks fluctuate between 100 and 400 points a year. More recent action has prompted a cap around $770 which shares cannot seem to pass. Remember that when less shares are available, the price will increase proportionally; nobody will buy $800 stocks. When we delve into more recent Google action, we see lawsuit after lawsuit in the tech world. Apple and Samsung, Microsoft against Motorola which dragged in Google, and most important for the search engine giant, Vringo (VRNG) and Google. Vringo, a tiny search engine company with stocks barely pushing $4, happens to own hundreds of patents that Google needs if they want to continue expanding their software. Most recommended Google to buy the company instead of settling a $700 million lawsuit; in the end, Vringo partially won, but only about $16 million. This seems minor in the end, but the original accusations led to an $80 collapse per share on October 18th. By the end of October, Google released strong earnings which prompted us to expect a rise in share price. This increase arrived, met the $700 cap, and continued to fall back down as more lawsuits were filed. Now, shares average near $650 for GOOG. Even though these cases will cause problems with investing, investors will soon learn that lawsuits are the next big thing in technology - greedy companies create, patent, and want to make money from each of their designs. We strongly believe Google is currently in the same situation as Apple: once things clear up, both can only improve and they will both more than thrive during the holiday season. We will try to post again early next year to show everyone how they did, but until then, which do you think is better?

1999-2001: The Rise and Fall of the Dot-Com Bubble

     Welcome back, everyone! Instead of focusing on a current event, we're going to backtrack a little bit to examine a significant period in the global economy: the financial boom of 1999-2001 and the minor recession which followed.
      In the mid to late 90s, vast improvements in computer-based technology and communications (such as the development of the Internet) ushered in what became known as the Dot-Com bubble; indeed, the overwhelming optimism surrounding this prospective new field fostered the growth of completely new job sectors and IT careers. It was essentially required of any large firm at this time to make the progression into the "Information Age" and integrate computers into the workplace. Needless to say, the implementation of the Internet had a profound effect on society as a whole, and the economy experienced an unprecedented boom as commercial activity flourished.
     Of course, all that glitters is not gold. As revolutionary and beneficial as the Internet proved for commerce, the World Wide Web gradually became a commonplace standard for all firms and businesses. Thus, by 2001, much of the optimism regarding the "dot-com" era had subsided, resulting in the creation of fewer jobs and a slower rate of development for those firms which had yet to implement this new technology. Consequently, the Dot-Com bubble collapsed, sending much of the world into a minor recession of economic activity; additionally, the unfortunate tragedy which occurred on September 11, 2001 served to undermine the global market even further.
     Upon comparison with other global recessions (especially with that of the late 2000s), the recession of 2001 reveals itself to have been relatively minor and short-lived, leading some to question whether it should truly be classified as such. Nevertheless, the commercial boom of 1999 and the economic cliff of 2001 epitomize the transforming Information Age, a time in which a revolutionary new technology came into the business world, developed at an astonishing rate, and eventually matured to become the modern-day norm with which virtually large firms conduct business. Perhaps when the Internet meets its twilight years and some shimmering new communication system comes to fruition, we may look on the fate of the Dot-Com bubble as a precautionary tale.

-Chris Cattafi, Co-Founder/Vice President of LMHS Investment Club

Hewlett-Packard

Welcome back to the LMHS Invest Club blog! Today's company reigned supreme for over half a decade in the computing world, but has recently fallen off the throne and is no longer the top distributor of personal computers. Yes, Hewlett Packard (HPQ) is our company of the day. It was established in 1947, and is now headed by CEO Margaret Whitman. As we will soon reveal, HP was the leader in the PC industry for almost half a decade, but was surpassed recently by Lenovo. Why is HP breaking down like this? Let's take a look. Like the other companies we observe, HP experienced stunning growth in 1999 but plummeted thereafter by 2002 (we will talk about this very soon!). This tech company turned to a path of consistent growth in late 2005, maintaining it until the 2008 recession - HP was on the top of the world, and was the largest producer and distributor of personal computers. Since 2010, Hewlett-Packard has slowly been dwindling down, off the throne, and far from the top of the industry. Since reaching nearly $60 in 2010, HP rests not even at a quarter of that amount now. Considering the recent plummet, we can almost already conclude HP is a lost investment. Over a month ago, in early October, the company forecasted revenues a staggering 15% below the previous fiscal year. This vicious cycle can only hurt HP - less investing, less stimulation of growth, less internal spending for improvement, fewer sales, less revenue, and the cycle repeats. Unless the public or private investors put more money into the company, the cycle will continue and HP will eventually fall apart. Our best suggestion would be for the company to either split or shut down the personal computing division, which hosts the majority of yearly deficit. Simply put, HP better improve their computers or Lenovo and others will push them in the dust.

Microsoft

Happy Friday to all our readers! We welcome you back to Tech Month, and are bringing to you today one of the biggest players in the software industry, Microsoft (MSFT). This tech giant we have known since 1981, founded by Bill Gates and Paul Allen, focuses on software, operating systems, as well as gaming. The current CEO, however, is Steven Ballmer. The most widespread Microsoft product is the Windows OS. The first system, the "MD-DOS" ran on an IBM computer, and followed soon thereafter with Windows 1.0. Now, the company's most recent OS is Windows 8, designed with emphasis on the most modern technologies, especially tablets. Now, for the stocks. Like other companies, Microsoft experienced steady growth in the 80s and 90s until 1999, when it drastically surged to around $60 a share. Since then, shares have unfortunately remained stagnant in the $25-35 zone. We expected more growth considering the evolution from Windows 98, ME, XP, Vista, and 7, now with the spreading Windows 8. With these first statistics, we do not expect significant growth with the new OS, and October's results provide us congruent information. Windows predicted huge numbers with the release of Windows 8; remember that most PC users use Windows (half the blog readers, just a small sample of all the users worldwide, use Windows). Upon hearing these news, we were excited; we looked forward to seeing upwards development, but unfortunately saw a complete foil. Earnings per Share (EPS) instead fell 20% in mid-October. EPS describes the amount of money expected to be gained or lost on each individual share over a specific period of time, often a quarter (QT) or Fiscal Year (FY). That same month, however, Microsoft announced that their new Windows 8 platform would expand beyond only Nokia phones. Although the Nokia Lumia is increasingly popular, and a well-needed comeback for the company, Microsoft has plans to seek other phone manufacturers, including HTC and its own Windows Phone. Now, for our verdict: we believe Microsoft is heading on the right path but it is not yet a safe bet for investment. Considering the longevity of the stagnancy hovering over Microsoft on the market, investing will be prime when the Surface with Windows 8 Pro is released. Our simulated investments turned a loss as well, as we bought shares at $29.64 and they now sit at $28.81.

Sony

Welcome back to Tech Month! The next company we are discussing focuses on televisions, cameras, video equipment, and gaming hardware - PlayStation. That's right, today we are talking about Sony (SNE). Sony was established in 1946 and is currently headed by the CEO, Kazuo Hirai. This is an interesting company on the Stock Market, as it has failed to experienced significant growth in the long term, adding to the fairly continuous decline in share price since 2001. Unfortunately, Sony never fully recuperated from the 2008 global recession and remains at levels about a fifth of those in 2007. When we look at the month of October, we see an imbalance marked by little room for growth. However, the release of updated products advise an increase in revenue over the coming weeks. The main product of October, the PS3 Slim to be precise, already show signs of gain. The PS3 Slim, as inferred from the title, is the original PS3 but in a slimmer and sleeker body, with sales already surpassing expectations. If Sony keeps up these sales, and continues to produce high-quality products (perhaps a PS4 or the like) in gaming hardware, the company would certainly place itself on the right track to popularity on the market. In mid-October, Sony announced plans for a new convertible (tech, not car). For those of you unfamiliar with the device, a convertible is a tablet with a detachable/attachable hard keyboard. This is a great option for users that want to convert to a tablet, but still want to have the laptop and desktop feel - one of the best transitions. These plans, are we expected, provided sustained growth for the company until the end of the month. A few days later, Sony announced new plans for worker benefits in Japan with the implementation of early retirement. This is something surrounding Japan only, and had no legitimate consequence on the global market, despite the decrease in share price. Unfortunately, we do not predict a healthy future. Considering our simulated investments on Investopedia, we bought fifteen shares a few weeks ago priced at $11.93. The market closed today with Sony at $10.90. The Japanese market, however, experienced a minor collapse with new problems with the Japanese Yen just today. We believe these problems will fade soon, but still do not expect a reliable Sony over the next few months.

European Sovereign-Debt Crisis: The End of the Euro?

      Welcome back, everyone! We hope everyone had a smooth transition out of Daylight Savings Time earlier today.

      As 2012 draws nearer and nearer to a close, our worldwide sensibilities will recognize the conflicts arising in the European economic market. Such is the severity of this recent downturn that many question the persistence of the Euro as a common currency in the near future. As congruent with any major crisis, one naturally must wonder as to why Greece's banks have failed so miserably or why Spain's unemployment rate skyrockets into economic monstrosity. The answer to this question lies in a fundamental aspect of the European market: government debt.

     This crisis, known officially as the European sovereign-debt crisis, arose in late 2009 as a result of the global recession of 2008. As banks around the world pleaded for government bailouts, private debts translated into government debts as the housing and property bubble "burst;" this proved especially significant in Greece, where the entire private sector experienced a collapse. A requested bailout was produced by Germany, ameliorating the Greek structural deficit (whilst simultaneously worsening the recession by inciting spending cuts); despite this, a decline in investor confidence sharply crippled Greek credit. Thus, these factors combined with the resultant political and social unrest have led many to speculate that Greece must eventually leave the Eurozone.

     A similar phenomenon has recently developed in Spain. Before 2010, Spain maintained a relatively low public debt level in comparison to GDP. However, deficits rose by 2011 as a result of the European bailouts. This rise in national debt experienced a snowball effect in early 2012 as interest on Spanish bonds reached 7%. Several austerity measures and a plan for bank recapitalization have been put into place, but Spain's precarious economic condition remains a vital topic of interest.
    
    As one may observe, the recent financial crisis in the Eurozone can be classified as a "crisis of confidence." The precise ramifications of this difficult situation are unclear, as adjustments in creditor-investor relationships remain murky. One can, however, foresee a definite schism of the European commercial alliance as variations in work ethic and economic austerity become all too important.

-Chris Cattafi, Investment Club, Co-Founder and Vice President

Intel

Welcome back to the Invest Club blog! Today's company is Intel (INTC). Intel is a tech company that focuses on digital platforms and processes, and produces chips such as the currently popular i3, i5, and i7. Intel was established in 1968 and is currently headed by Paul Otellini. This company drives further the advancements in computing by producing smaller, faster, and more efficient hardware for desktops, laptops, mobile phones, and tablets alike. Intel saw slight growth on the Stock Market until 1999-2001 when it experienced a tremendous surge upwards followed by a sharp decrease by 75% from the previous year in 2002. If you have been reading some of the other posts on this blog, you may have noticed a continuing trend with most companies we evaluate - this 1999-2001 scenario affects everyone, but not to worry, we are covering this topic tomorrow! We will find out what exactly happened and why everything changed suddenly. Back to Intel: we analyzed the last few weeks on the market and found some interesting figures. On October 8th, Intel announced plans to lay off 7100 employees. Stocks that day opened $0.40 lower than the previous day's close. Just a week later, Intel released its 3rd Quarter Income Statement, which showed profits that surpassed expectations, but that were unfortunately still below original predictions and a whooping 5% lower than than last FY's 3D. It is fair to say that Intel is not headed on the brightest path with such results. Further, analysts expect Intel to lose even more revenue due to the laptop to tablet transition, still a jejune world to this company. We advised our members on Tuesday to avoid investment in Intel, considering the disappointing income statement and the inability to stay on schedule with the growing technological world, and our simulated investments back our predictions. We purchased shares priced at $22.62, which closed on Friday with a price of $22.06. Intel simply is not in a state that is optimal for investing, and, in our point of view, we would set a 'neutral' status.
Thanks for reading the blog, and to our followers!