From Tyler: Tech Titans

tylerAs I write this, the Dow is at yet another record. The S&P 500 is within five points of an all-time closing high. For the year so far, the Dow’s up 10%; the S&P, about 9%. Nasdaq is trailing a little, up 7%, mostly because Apple has turned sour.

But Apple’s woes, temporary or not, are nothing compared with those endured by two former tech titans we’ll discuss on Nightly Business Report tonight: Dell and BlackBerry. Once, these two companies were the ultimate growth stocks. Every portfolio manager wanted them, and if their prospectus allowed it, they owned them. Not anymore. Now they are deep value plays, with some investors questioning whether, in the case of Dell, it will survive as a public company and, if so, with whom at the helm; and in the case of BlackBerry, whether it will survive at all or be taken over by a rival phone or software maker.

bbBlackBerry’s shares are down 86% over the past five years. Dell’s are off 26%, but that makes the performance look better than it is. For one thing, the shares are up 36% this year, responding to rival bids for the company from founder Michael Dell, Carl Ichan and Blackstone Group. For another, if you go all the way back to Dell’s heyday, it was a $54 stock – and, dude, if you didn’t have a Dell, you just weren’t cool. Today, Dell is trading around $14.50. That’s a $40 loss, just under 80%.

It’s anyone’s guess what will happen to these two onetime stalwarts. But what has happened to them is unmistakably clear. They got outflanked. They failed to see around the next corner. Their products, once so cool and dominant, lost the “it” factor. And they lost it in a hurry. Their experiences are the stuff of B-school case studies, and they should be a lesson to investors like you. Particularly in such fast-changing industries as computing and telephony, kings can become paupers almost in the blink of an eye. To invest profitably in these fields, you’ve got to do more than the usual amount of homework and trend analysis. In tech, when you buy or sell can be even more important than what you buy. Cellphones and computers aren’t Cheeze-Its. Brand and product preferences shift fast. You’ve got to be ready, and nimble.


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