Out Fox The $treet

The common perception by investors is that Steve Ballmer was a complete failure while CEO of Microsoft ( MSFT ) . Sure he could've done better at developing a mobile software strategy. Sure he could've done better at developing products to compete with Apple's ( AAPL ) slew of consumer gadgets that made billions over the last decade. Investors miss the point, though, that not only did Microsoft perform in line with the other technology powers from the 2000 technology bubble, but it wasn't a product design firm like Apple. Most investors forget that Apple designed the most appealing computer at the time so it was only staying within its core competency by building a iPod, iPhone and iPad. Microsoft though got distracted attempting to make products instead of focusing on developing software to dominate the mobile world. Instead, Google ( GOOG ) now dominates the mobile world with the Android even surpassing iOS from Apple. Read the full article at Seeki...

The secular decline of the PC market should make any investor question why Dell ( DELL ) should obtain a premium valuation to the LBO offer of $13.65. The company has limited traction in the mobile sectors of smartphones and tablets, suggesting the business is only getting worse, not better. The stock should've been hammered Friday on the report by David Faber on CNBC suggesting the operating income forecasts used to value the LBO will be cut. The stock though actually rose for the day to close at $14.31 and above the offer. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

On Friday, Staples (SPLS) announced that it intends to launch a service providing 3D printing capabilities at stores in the Netherlands and Belgium beginning in Q113. While private companies such as Shapeways already provide the ability for designers to create and market 3D printed products, it doesn't have a store in every major city where customers can pick up the products. Staples is already a leading provider of printed items so this was only a natural extension for the company. Honestly, it already seems odd that 3D printing demand has started to explode, yet the majority of household technology companies aren't involved. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The Direct Digital Manufacturing and 3D printing sector remains hot with the strong results reported by Stratasys, Inc. (SSYS) Friday morning. The stock, though, was smashed 12% as investors fretted over inline Q4 guidance. Stratasys engages in the development, manufacture, marketing, and servicing of three-dimensional (3D) printers, rapid prototyping (RP) systems, and related consumable materials for office-based RP and direct digital manufacturing (DDM) markets. As written back in September, with the stock trading on Objet highs, Stone Fox Capital warned that investors were placing too much emphasis on a complex merger. At that point, the stock was valued as if the merger would complete without any hitches. Read the full article at Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Investors have been hyped since the announcement of the proposed merger of Stratasys (SSYS) and private Objet back in April. The deal promised to create a market leader in the surging 3D printing market. Stratasys engages in the development, manufacture, marketing, and servicing of three-dimensional (3D) printers, rapid prototyping (RP) systems, and related consumable materials for office-based RP and direct digital manufacturing (DDM) markets. While the effectiveness of the merged company remains a question, no doubts should exist that the stock has been a homerun since the deal was announced in April. By mid-August, Stratasys had nearly doubled. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The 3D printing market continues to remain hot as top competitors 3D Systems (DDD) and Stratasys (SSYS) again surged to new all time highs last week. The sector has been hot amid advancing capabilities of additive manufacturing via localized 3D printing even now affordable at home. On top of that, Stratasys reported results last week that helped boost the stock and the sector even more. Stratasys is a leading manufacturer of 3D printers and production systems for prototyping and manufacturing applications. The company is set to complete the merger with Objet in Q3. Previously a preview was completed of the earnings report for Stratasys. The research suggested that the company had a history of predictable earnings reports and that investors should expect a beat on earnings on August 1st. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page fore more details. 

After the close on Wednesday, Mellanox Technologies, Ltd. (MLNX) reported quarterly numbers that sent the stock soaring as much as 50% after hours. A very incredible and unheard of move for a stock with a $2.7B market cap. A move typically only reserved for FDA approvals on biotech stocks or buyouts. Mellanox is a leading supplier of end-to-end interconnect solutions for servers and storage systems. The company claims to have benefited from growth in the HPC, Web 2.0, storage, database, cloud, Big Data, and financial services market. Basically every part of tech that is hot except maybe that last one. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After the close on Tuesday, Dell (DELL) announced that the Board of Directors has adopted a dividend policy under which the company plans an initial dividend rate of $0.32 per share per year. Based on the current price, the dividend yield would be 2.7%. Considering the recent history of share repurchases, this move towards a decent dividend highlights the shift in mindset for the market. Dell has repurchased 14% of its outstanding shares over the last four years and considering the company trades at a sub 6 PE the logic would suggest continuing that plan. Why start a dividend now? The market, though, has increasingly stated that share repurchases don't work. Sure looking at Figure 1 below suggests that theory to be correct, but where would the stock price be if the company hadn't bought all those shares? The 2014 estimates around $2 would quickly drop to around $1.72 without the share reduction. Investors forget that these moves don't happen in a vacuum. Read the full ar...

Hewlett-Packard (HPQ) spent the first half of 2011 buying back a ton of stock amounting to a decent percentage of the outstanding shares. A signal typically that a company has a lot more free cash flow and cash on hand than the market is giving the company credit for having. Unfortunately, this buyback pace didn't last even though the stock steadily declined in the 2nd half of 2011. So why did the buyback dwindle if the stock didn't gain in value? Nothing worse than a company that buys high and doesn't buy low. It can be argued that with a new management team coming in that it was just a change of strategy not a signal of a change in fundamentals. This is possible as Meg Whitman became CEO in September 2011, but she was a board member since January 2011. Read the full article at Seeking Alpha. Disclosure: Long TRV and WLP. Please read the disclaimer page for more details. 

In general my firm is very bullish on companies with stock buybacks and especially ones that contribute to reaching lofty net payout yields (combination of net stock buybacks and dividends). Studies such as  this one  show that buybacks contribute along with dividends to the ability to predict future alpha. Unfortunately the off-the-cuff results from the last 15 months suggest the hardware and communications equipment sub sector of tech doesn't benefit from buybacks, at least in the short run.  Read the full article at Seeking Alpha.  Disclosure: Long AAPL, CSCO, and MSFT. Please consult your financial advisor before making any investment decisions. Please review the disclaimer page for more details. 

Interesting news out of United Airlines (UAL) today. United announced that they will utilize 11,000 iPads  to convert to paperless flight decks for United and Continental pilots. This is huge news considering that HP (HPQ) just folded from the tablet market last week. With a market that is clearly opening up, Apple (AAPL) has garnered a major foot hold into the business sector. Now these 11K pilots and support personnel at UAL will likely be drawn into buying iPhones and iMacs for the home. Continues to lead to a major shift towards AAPL hardware and farther away from HPQ, Dell (DELL), and Research in Motion (RIMM). These electronic flight bags (EFB) replace paper flight manuals providing pilots with paperless aeronautical navigational charts through an iPad app. The estimates of paper and fuel savings are amazing. 16 million less sheets of paper per year even saving 326,000 gallons of jet fuel a year. Not only will it improve efficiency, but it will reduce the risk of injur...

This article is the fifth in a  series  focusing on sectors that have struggled to recover from their pre financial crisis levels. Large-cap techs are one of the most hotly debated sectors today. With tech companies like Apple ( AAPL ), IBM ( IBM ) and Oracle Corp. ( ORCL ) trading significantly higher than 2007-08 highs, many investors expect the laggards to catch up soon while others expect them to slowly decline. The sector generally peaked at the end of 2007, so the companies mentioned have been down for over four years now. The sector is also very different from the others covered, since none of the companies were anywhere close to all-time highs reached in the internet bubble of 2000 when the crash started in 2007. Also, while these stocks remain below financial crisis highs, they aren't down as much as the other sectors, partly due to strong balance sheets loaded with vaults of cash. Read the full article at Seeking Alpha.  Disclosure: Long AAPL, CSCO, and MSFT...