The Half Baked Cake

Somnath is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The Toothpick Test

One of the most popular methods of testing a cake for doneness involves little more than a toothpick and a bit of patience. You can insert a clean toothpick into the center of the cake when the estimated baking time is nearly up. If the toothpick comes out clean or nearly so, the cake is usually done.

Windows 8 will be released to the public before it's fully baked—that's apparently the latest message from Intel CEO Paul Otellini.

The personal computer business is having a glitchy year to say the least. Due to increased competition and a move towards mobile devices, PC demand is on the decline. The industry has been waiting on Microsoft Corporation’s (NASDAQ: MSFT) new Windows 8 operating system to reboot sales later this year, but one executive is warning that it is being released before it is completely ready.

Bloomberg reports that Otellini, speaking to a group of employees at a private company event in Taipei on Tuesday, said improvements "still need to be made to the software." Otellini reportedly said that Microsoft is making the right decision by releasing the software before it's ready, because improvements to the OS can be made after it ships. Intel is the industry leading semiconductor maker and Microsoft’s closest partner.

According to analysts, Windows 8 isn't quite as buggy as Otellini suggests. However, if you expect perfection from Windows 8 out of the box, you may be disappointed. Perhaps this is why some people still subscribe to the old computer culture maxim, "Never buy a version of Windows until SP1 is released." Service Pack 1, or SP1, used to represent the first major collection of patches and fixes for a new Windows operating system, and would resolve a lot of the issues that customers faced after the OS's initial release.

The other movers and shakers

For the first time, Google (NASDAQ: GOOG) outshines Microsoft in market value, becoming the second-most-valuable global tech company behind Apple. Google is on a cleaning spree to discontinue most of its services which have been sparingly used by its users.

For those who turned to Google's News Badges as a means for validating news, Google is officially discontinuing the game-like icons that would previously indicate one's appreciation for a particular type of news — like a "Harry Potter" badge, if all you do is read articles about the boy wizard. Voracious readers could earn badges across five different enthusiasm tiers: Bronze, Silver, Gold, Platinum, and the not-quite-a-metal, "Ultimate" ranking. Google will no longer allow users to add customized backgrounds to Google.com via the company's "Classic Plus" feature. Starting in November 2012, the main Google page will revert to that-which-everyone-else-sees, instead of whatever customized image you've previously uploaded to use as a background.

Google's also officially killing Adsense for Feeds — a means by which content creators could allow Google to slap ads directly into their RSS feeds as a revenue-generating system. Google's starting the retirement process for the service on October 2nd, with the goal of shutting it down entirely on December 3rd.

With the cleaning spree, the company is on a growth path with revenue growth of 23.99% and earnings growth of 25.75%. The P/E of Google 22.58 against 14.74 of Microsoft, while the EPS is $8.42 and debt/equity ratio is 9.59%.

Legally yours

With the launch of its new iPhone 5, Apple (NASDAQ: AAPL) is on cloud nine. Apple may have taken a lot of heat recently for "flaws" and glitches such as its Maps app and a Wi-Fi bug in its latest iPhone 5, but that apparently hasn't stopped the phone from selling more than 5 million units. Those numbers could rise to a staggering 50 million over the December quarter, according to CNET.  

The world's two biggest makers of high-end phones Apple and Samsung have accused each other of copying designs and technology for mobile devices and are fighting patent battles on four continents to retain their dominance in the $219 billion global smartphone market. The analysts opine Apple is trying to ban several Samsung handsets from sale in the US. Apple's fourth fiscal quarter of 2012 which closed last Saturday, Sept. 29 was supposed to be even weaker than the third. The current P/E of the company is 15.50 against the market P/E of 18.00. Revenue growth of Apple is 42.64% while the earnings growth is whopping 62.30% and the impressive debt/equity ratio is 0.00%.

Keep the Windows open

Despite Otellini making the worrisome comments, he goes on to explain that releasing Windows 8 before its fully ready is the right move, and that Microsoft can make improvements after it hits store shelves. With the holiday season quickly approaching, it is vital that Microsoft refreshes its operating system to attract consumers. Furthermore, the early reviews of Windows 8 have been mostly positive. CNET awarded the operating system 4 out of 5 stars, saying, “Microsoft makes an aggressive, forward-thinking, and bold statement for the future of PCs with Windows 8.” Meanwhile, Tech Radar gave it 4.5 out of 5 stars. There’s lot to expect from Microsoft which is one of the 50 companies which has the highest dividend yield at 3.12%. With a P/E of 14.74 and a debt/equity ratio of 18% the investors are definite to feel the touch experience of Windows 8. The revenue growth of 6.89% and earnings growth of 5.33% makes the stocks even more bullish.

Know What You Own

It's been a frustrating path for Microsoft investors, who've watched their company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand new premium report on Microsoft Fool analysts explain that while the opportunity is huge, the challenges are many. Also provided are regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

 


SomnathGuha has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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