Ten Tech Tells for ’10

• Posted by Chris Selland
• on December 22nd, 2009

This is by no means a comprehensive list – it’s admittedly biased toward the tech sectors I follow most closely (software and wireless) – but here are a few companies I’ll be keeping an eye on as we move into the new year – some as short-term opportunities, others with a longer time horizon.  If, as expected, 2010 is a big year for tech, these are some companies that should be worth watching.

Dell ($DELL) – everybody loves to hate Dell – but have you heard any ‘Dell Hell’ stories lately?  Me neither – which could be an indication that the company’s customer service and quality issues are improving – or maybe that they weren’t all that bad to begin with.  But what I see as a potential catalyst for Dell could be a relationship with Google ($GOOG) to build the next generation of mobile devices around the Android and Chrome OS’s.  Android devices are already on the way, but I believe that a Chrome netbook could be even more lucrative – the iPhone of 2010 – someone’s going to make it (and it certainly won’t be $AAPL).  In the meantime, you’ve got a well-diversified tech company at a cheap valuation with significant market share, run by a smart and proud guy with his name on the door.  It won’t take much good news to turn things around – I am currently long.

Novatel ($NVTL) - The stock has been rightfully beaten down after their big Q4 miss and is in an extremely competitive segment, but with $6/share in cash and a product customers can’t stop raving about (the MiFi), I am comfortable being long, even if I need to be patient.

Google ($GOOG) - $GOOG vs. Apple ($AAPL) will be the story of ’10 – but expect to see what happens when titans clash – they don’t get hurt nearly as bad as those around them. There’s little question that Google will get aggressive on the M&A front in ’10 – they’re already there – the more important question is whether they’ll be disciplined about it.  If, as rumored, they walked away from the $YELP deal, I consider that a good sign.

Research in Motion ($RIMM) – was their great Q3 a turnaround, or an aberration?  By no means do I think they’re dead, but their next quarter will be huge.  Expectations for this past quarter were very low – that won’t be the case 90 days from now.

SAP ($SAP) – traditional enterprise software is in an irreversible secular decline, and the long-awaited transition to the (pick your buzzword) Software-as-a-Service/Cloud/OnDemand model is proving much more difficult than advertised – SAP has had their By Design OnDemand suite poised to take over any day now – but that day never seems to quite get here.  It had better happen in ’10.

Oracle ($ORCL) – facing some of the same issues as SAP but they are making more progress toward getting it done – notably by buying, not building – and are also much more diversified, especially upon closing of the Sun ($JAVA) acquisition.  Are more acquisitions in store?  No doubt – Oracle should be one of the big buyers in ’10, particularly of anything enterprise-focused.

Salesforce.com ($CRM) – Salesforce continues to set the standard for OnDemand applications – big question is what they do next.  ’Chatter’ is interesting, but I also expect them to look beyond organic growth and get more aggressive on the M&A front – or quite possibly get acquired themselves.

Facebook ($FBOOK) - Paul Kedrosky expects a big year for tech IPOs in ’10.  So do I.  He said we need a ‘Netscape moment’.  Facebook will provide it.  No question the IPO will be huge – how huge will set the tone for the rest of the year.

Nuance Communications ($NUAN) – as I wrote earlier, $NUAN is very well-positioned in two hot markets (Mobile & Healthcare).  New iPhone app is getting rave reviews and is a great way to build consumer awareness & brand.  Share price has bounced around but news has generally been good and I love it long-term – I am long $NUAN.

Sprint Nextel ($S) - another stock that, like Dell, is beaten-down but which I believe could turn around nicely with a few bits of good news.  Mobile broadband will continue growing in 2010 as consumers shift to smartphones and begin to look at replacing their  cable/DSL providers.  $T can’t even service the customers they already have, and $VZ is too busy taking customers away from $T – so who better to benefit than $S.  High risk – very high – but I am long.

What’s on your list?

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