I’ve never done well investing in the technology sector, with a couple of notable exceptions


Let me list my failures: Intel, Dell, Hewlett Packard and Yahoo. There may be some others, but there are times when I buy stocks in companies without even knowing what it is that they actually do.


Probably not a good idea.


Nearly 30 years later, I still recall a close call in the technology sector.


I received an allocation in the IPO for  hot company called Eagle Computer. It was perceived as a real competitor to the IBM PC back in the very early days when a PC cost about $5,000 or more, if you wanted a second floppy drive for storage.


Funny story.


Its charismatic CEO was killed in a car crash on the day of the IPO.


OracleOnly an oracle could have foreseen that.


The underwriters actually refunded money to IPO investors and ran their next IPO a few months later without me. Eventually, the proprietary Eagle Computer, bereft of its guiding light, morphed into an IBM clone and then was sued out of existence by IBM along with some other early players.


In hindsight, maybe that’s not such a funny story.


I was spooked by the reliance on a single individual and continue to be so.


Technology seems to be highly linked to charismatic individuals.


Okay, sometimes, like Bill Gates, they’re not really charismatic, but in his own way, he was. Who else could turn mosquito netting into a sexy way of saving lives?


Ballmer?


Yeah, I’ve had Google, Apple and even Research in Motion but I seem to remember the failures more vividly.


The investing successes in technology include a company that I really don’t have any idea of what they do and have happily been in the dark for years.


Riverbed Technology.


The “Technology” part of their name gives me some idea of their sector, but that’s all I really need to know.


When it comes to technology, there really is a powerhouse and it’s Oracle Corporation.


As a powerhouse, Oracle is the baby of another powerhouse, Larry Elllson.


Oracle is involved in absolutely everything and they compete furiously with absolutely everybody. Ellison never pulls punches and isn’t really known as a diplomatic sort.


He qualifies as charismatic and he certainly lives that manner and portrays himself as such. He lives hard, plays hard and competes like there is no tomorrow.


I used to have an Uncle, that whenever I introduced him to a friend of mine, would reach into his pocket and pull out one of those free little calendar books that he would get each year from the Jewish Funeral home, to whom he had pledged his business.


He would go to the back of the book and look up where that friend was from and would announce something to the effect of: “Calcutta? 10,000 Jews.” or “Pittsburgh? 60,000 Jews.”


He wasn’t much into popular cilture, but would have loved the game “Dead or Alive, Jew or Not?”


People don’t like Larry Ellison, but he probably foresaw that as he continued to fine tune his personna.to make himself even less likable.


My uncle would probably have liked Larry Ellison purely on the basis of heritage and business success.


Investors may have liked Ellison’s results, but some of the more recent ones may take exception to that.


Despite his known penchant for cars, add to his credit not sharing the same fate as Eagle Computer’s Dennis Barnhart.


In fact, I found it surprising that he would partially share the stage with another high profile technology person Mark Hurd, fresh off the controversy at Hewlett Packard, even though it was clearly a finger in the eye of HP.


But Ellison was an Oracle. The Oracle of Redwood Shores.


He clearly knew that the wall was approaching and there had to be someone else to pin the blame upon.


In fact, at an earlier earnings report, even though Mark Hurd had only joined Oracle a very short while earlier, Ellison credited Hurd with the great quarter.


Magnanimous, no?


No. Set up, yes.


Easier to share the credit than to take all of the blame. But still, it’s unlikely that Ellison would turn too quickly on Hurd, becasue memories are still too fresh and remember the circumstances with which Ellison bought Hurd to Oracle.


Too much personal aura at stake to put him out to dry.


Instead, today, Oracle spread the pain by predicting that technology spending was suffering from delayed business spending.


In other words, macro-economic issues rather than company specific.


Well, that’s one way of deflecting responsibility and perhaps shielding the executive offices from criticism.


Oracle’s prediction spread gasoline on the sector and I got a burn along the way.


A past trading success of mine was VMWare.


Actually, I should correct that, and as Larry Ellison so graciously gave credit to Mark Hurd, I should give credit to my son for turning me back onto VMWare a few years ago when it was hovering at about $18.


I saw “back onto” because I recall when VMWare was spun off and was never able to find an entry point to buy shares. Then, I remember watching it do the 2007 plunge along with everything else.


But one Thanksgiving Friday I picked up those shares and eventually parted ways at about $45 plus a fair amount of option premiums.


Today VMWare, my beloved RIverbed Technology, of which about 70% of my shares are hedged, and another of my son’s favorites, albeit unrequited, CommVault got felled in the quake of The Oracle’s prediction. In fact, my son picked up some shares of VMWare this afternoon, hoping to ride it back to $90.


Not me.


Today wasn’t a good day for “The Cloud,” which has to also include Amazon, just as this hasn’t been a good year for oracles.


The world famous Oracle of Omaha, Warren Buffett has had a few mis-steps.


Bank of America comes to mind, but Buffett takes much larger steps and has a much broader time frame. I don’t think the Oracle of Redwood Shores shares the same perspective.


A loss isn’t a loss if it’s only on paper, so I doubt that Buffett is fretting too much. Even I know that paper doesn’t matter, especially if the printing presses are heating up.


Oh, actually another technology investment decision now comes to mind after checking through my archives. Seems that in my managed investment days, about 5 years ago, I owned some Oracle and racked up a 5% gain over two years, well underperforming the market during that time period.


Bleh.


And thent here was the decision to buy calls ahead of earnings almost years ago, just as I was getting started on my own.


Double bleh, but at least I learned something from that, which was that it takes an idiot to try and guess which way the market will react to earnings.


Especially when you know nothing about the stock. Although knowing retailing, movie rental and coffee, didn’t seem to shield me from the effects of purchases of Amazon, Netflix and Green Mountain Coffee Roasters, respectively, a few months ago.


Did I mention that those were bought right before earnings? But at least I had the call option sales to cushion the body nlows


So I guess I can put Oracle into the historical failure camp.


As far as oracles go, my hope would be that when giving guidance they could have foreseen the technology spending slowdown, but just as my own crystal ball is fuzzy, I suppose that even oracles have bad days.


The difference though is that my bad days don’t cause about $20 billion dollars of lost market capitalization.


My ability to see into the future is as good as anyone else’s, but on this one issue, I am by far in a position of superiority.


I can predict that I won’t be fooled into acting upon the thought that Oracle is now value priced.


Even though it may very well be, my Chevy Vega doesn’t let me take those kind of chances.


 



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