Saturday, October 20, 2012

This Morning: Pondering Microsoft Surface, Cheers for Oracle

Here are some things going on this morning in your world of tech:

The Street is contemplating the meaning of the “Microsoft Surface,” the tablet computer that Microsoft (MSFT) unveiled yesterday afternoon in a last-minute press conference. The device runs versions of Microsft’s Windows 8 and uses processors from Intel (INTC) and Nvidia (NVDA) for two different models. Exact timing of the tablet computers were not disclosed.

Williams Financial’s Cody Acree remarks, “We believe Surface may have one of the best chances to compete with Apple, as Microsoft has taken a more different design approach, rather than simply emulating Apple, as most other hardware vendors have done.”

Nomura Equity Research’s Rick Sherlund observed Microsoft investors may be concerned about lower margins from Microsoft selling a hardware product, but he’s not concerned. “While being in the HW business will be dampening to overall margins, this will likely add to gross profit [...] Investors may not like a lower overall margin for Microsoft, although we are more focused on the overall profit contribution.”

Microsoft shares are up 92 cents, or 3%, at $30.75 this morning.

Apple (AAPL), presumed to be in the bullseye here, has been up and down this morning, currently up 21 cents at $585.99.

What about Microsoft’s partners, who are also for the moment on the short end of the stick with Microsoft’s tablet? Shares of Hewlett-Packard (HPQ) are actually up a penny a $21.06, though Dell (DELL) is down 13 cents at $12.29.

One partner who is definitely enjoying the ride today is�Nokia�(NOK), whose shares are up 3 cents, or 1%, at $2.53.

The Surface is definitely a positive for chip suppliers Intel and Nvidia, analysts say. Williams Financial’s Acree thinks it’s possible the Intel version will be priced too high to move units very quickly, and thus boost Intel shares. But he advises Nvidia stock is a buy at the current level. And Sherlund’s colleague at Nomura, Romit Shah, writes today that a Windows tablet with an embedded keyboard and running Office “are interesting features, in our opinion, that should drive incremental revenue for Nvidia.”

Nvidia shares are up 72 cents, or almost 6%, at $13.12. Intel shares are down 3 cents at $27.39.

Speaking of Apple, in case you missed it, The Wall Street Journal’s Jessica Vascellaro and Amir Efrati�this morning write about the latest “moves” of Apple and Google (GOOG) in the smartphone market, including Apple’s coming out with its own maps product, and Google’s buying Motorola Mobility. The conclusion: “Of the about 1.4 billion phones sold this year, only about 35% will be smartphones, a percentage projected to climb to 75% in the next five years, according to research and trading firm Wedge Partners. That potential bounty is intensifying the fight to sell more devices and accompanying services.”

Google stock is up $7.33, or 1.3%, at $578.18.

Shares of Oracle (ORCL) are higher by $1.05, almost 4%, at $28.17 after the company last night reported a better-than-expected profit per share for its fiscal Q4, and projected projft this quarter slightly ahead of expectations as well. The reaction across the board seems to be fairly favorable this morning. The stock got one upgrade, that I can see, from Underperform to Outperform, at CLSA Asia Pacific Markets.

The early release of the report last night seems to have been prompted by the departure of the company’s head of U.S. sales, Keith Block, but that loss seems not to have fazed the Street this morning.

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