This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stock Under $10 that he thinks could potentially double or triple in the next 6 to 12-months. See what he's trading today with a 14-day FREE pass.

Bigger Than Tech; Showing Bruises: Cramer's Best Blogs

Stocks in this article: MSFTGOOGINTCEBAYGESLBBACUNH


Competition Is Bruising Tech Companies

Posted at 6:44 p.m. EDT on Thursday, July 18

Maybe there's just too much competition, too much disruption -- even for the disrupters -- and too little worldwide growth for tech to thrive right now?

That's how I feel after interviewing Bill McDermott, the co-CEO of SAP (SAP), after the company disappointed, in large part because of a slowdown in the Asia Pacific market but also because of the difficulty of switching to a more cloud-like model. That's how I feel after hearing from Microsoft (MSFT) and Google (GOOG), where the competition has really stung and the disruption has got even the most disruptive company in the universe, Google, which disappointed on the mobile line.

I think this competitive thesis doesn't get talked about enough. If you go on the conference calls of SAP and Oracle (ORCL), you hear about how dog-eat-dog things have become. These companies aren't even collegial any more. They are just going at each other. Oracle may have declared a truce with new partner Salesforce.com (CRM), but that's because Oracle simply didn't have enough of a cloud business, in part because that undercuts its lucrative enterprise software business.

We know that Intel (INTC) has got problems with its missing of the mobile move, but I think that it may even be surprised by a resurgent Advanced Micro Devices (AMD).


Meanwhile, what's winning this market? Companies that have little competition, such as the healthcare maintenance organizations. UnitedHealth Group (UNH) just isn't duking it out with anyone significant that I can tell. The rails? They don't seriously compete anywhere. The defense stocks? They've pretty much carved out their areas of expertise. The airlines? They used to go at it, but the government has sanctioned a host of mergers that take out the competition pretty much for good.

Yep, when companies compete, I mean really compete, like they do in cellphones and tablets and personal computers, it can be brutal out there. And the brutality can hurt the best, as we found out with Apple (AAPL) in the last few quarters and now with Google tonight.

Strength in the worldwide economy can mask the problems that stem from competition for those that do compete globally, but not in this environment, where Europe, Asia and Latin America are weak and can't be counted on for upside. Yep, competition is the common thread of the losers, without the economy to bail them out. Things can change -- new innovations, improving economies. But for the moment, the competition has gotten the better of the tech companies that have reported so far.

At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long AAPL.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Our Tweets

Brokerage Partners

Top Rated Stocks Top Rated Funds Top Rated ETFs