Whether companies like Microsoft Corporation (NASDAQ:MSFT) are providing better returns to investors, CNBC’s Jim Cramer ponders.
The large technology sector is being judged by portfolio managers using a “bifurcated prism,” the Mad Money host starts, which leads to the question of whether “old tech” companies provide more opportunities for better returns to investors than “new tech” firms.
Analyzing whether “old tech” will win over “new tech” in the final month of the quarter, Cramer explains that there are companies that managers grew up with like Intel Corporation (NASDAQ:INTC), Microsoft Corporation (NASDAQ:MSFT), Micron Technology, Inc. (NASDAQ:MU), Oracle Corporation (NYSE:ORCL), Seagate Technology PLC (NASDAQ:STX), Western Digital Corp (NASDAQ:WDC), Texas Instruments Incorporated (NASDAQ:TXN), Hewlett-Packard Company (NYSE:HPQ), International Business Machines Corp.(NYSE:IBM), and Apple Inc.(NASDAQ:AAPL).
According to Cramer, hedge funds which have gotten “crushed” in the stocks of “new tech” are now eyeing “old tech” as the place to be in. However, he noted that after the swift fall in “new tech” stocks, there has been a “terrific bounce” that the opportunistic may have profited from. Nonetheless, he said that he thinks “new tech” stocks now seem to be extended.
As for old technology companies like Microsoft Corporation (NASDAQ:MSFT), Cramer added:
“Meanwhile, ‘old tech’ just keeps plodding along, and while the stocks have certainly been strong, they also have strong fundamental underpinnings, including big profits, in many cases outsized dividends and gigantic buybacks.”
Cramer cites the new partnership between salesforce.com, inc. (NYSE:CRM) and Microsoft Corporation (NASDAQ:MSFT) as an example of how this tug-of-war between “old tech” and “new tech” is being put in the spotlight. The Mad Money host also discussed how he thinks both company benefitted in the video below.
Judging from the way the stocks of both companies moved after the announcement, Cramer stressed that he thinks this is reflective of the way investors view “old tech” versus “new tech” stocks. Citing what recently happened to Splunk Inc (NASDAQ:SPLK), he noted:
“Splunk shows you that in the end, ‘new tech’ is far more vulnerable than ‘old tech’ and that’s how you get such a hammering.”
In the video below, Cramer also talked about how the Microsoft Corporation (NASDAQ:MSFT) deal with salesforce.com, inc. (NYSE:CRM) could not have been reached under former CEO Steve Ballmer who has recently bought the LA Clippers NBA team.