Are Tech Companies Good Investments?

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July 18 (Bloomberg) -- Oppenheimer Global Debt Team Leader Sara Zervos and Bloomberg’s Anand Srinivasan discuss investing in tech on “Bloomberg Surveillance.” (Source: Bloomberg)

This comes on the heels of the big partnership between apple and ibm on mobile enterprise.

Google plus mixed bag earnings.

Microsoft had big job cuts.

Our tech analyst joins us.

A lot of headlines.

Which one has the most enduring impact?

The microsoft restructuring was big news from a pretty bold move for large-cap company to go through its largest cut ever.

We are paying attention to that and implications of that to the purported new microsoft.

The apple-ibm deal is a significant one.

The corporate tablet and the corporate handset market is a very growing market, a profitable one.

Apple has not had presence there.

That deal is a significant relationship.

Lastly, the fox for time warner -- i forgot about that.

It is an interesting development.

Media and internet analysts are paying close attention to that and what could happen in that space.

Could google, in?

Are the big tech companies or media companies -- the m&a landscape is dramatically changing between the content distributors and producers.

You're starting to see new -- the names you mentioned are important.

What used to be a very closed section has now sort of -- the lines have gotten significantly blurred.

Internet companies are coming in internet a lot of content and distribution.

And they have a lot of firepower, too.

I thought this was the single most important headline of the week.

Because of the continued buyback.

This is just a slave of use of cash.

You have to deploy cash to shareholders.

Do you see any end in sight?

The exciting thing is the economy and u.s. is starting to pick up.

Once the economy has total traction, companies have to start investing again.

We're on the cusp of that.

Do you agree with that?

The technology company has historically been the opposite way, that too much cash on the balance sheet not enough to do -- to know what to do it.

Companies have grown up.

They're buying back a lot of stock.

The one thing we will say is we have analyzed a lot of the returns on buybacks.

Historically, tech companies have not done a good job of buying back their own stock.

Dividends have historically, looking at most of these companies that have somewhere between minus four to plus 4% returns on buyback, those are not very sexy.

Dividends on the other hand is the capital back to shareholders.

They know what to do with it.

Are you saying you what a dividend increase and not a share buyback?

No opinion on that one.


We will get another opinion.

Alibaba is a company about to have a lot of cash with the ipo.

That is a great question.


Plus earnings were ok, but the fact they're going to hold onto a bigger portion of the ali baba stake for longer was more impactful.

Very noted -- i think newer companies tend to hold onto cash a little bit more longer and they want to get a few quarters under their belt before they start shortly thinking about their use of cash.

What will you be looking for in the tech world in the next week?

Intel reported this week.

The pc industry seems to be -- is it back from the dead?

We don't know.

It is a big industry and has a lot of tentacles and other spaces.

I want to see continuity and see if the recovery carries over to the home consumer space.

With microsoft, was this a failure of steve ballmer, these announcements?

Was it a repudiation of mr.


The fact that most of the job cuts are in an organization that just acquired.

And a hardware organization, not the software one.

Fair enough.

Historically, they're also walking way for most of the android business.

If you were to read the tea leaves that way, that is one popular media angle, but the



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