A Year in Tech

Brittney Barrett |

Technology is always among the most interesting sectors to recap considering that the advancements and changes of one year serve as the building blocks for the next. It’s also a highly competitive field where a minor tweaking of one product can make or break public and private sector sentiment toward it. 2011 was a busy year for technology that will surely be remembered for several events.

Steve Jobs Passes

October of 2011, Steve Jobs the visionary and CEO of Apple (AAPL) passed on only months after resigning his role as CEO. Not only was it considered a loss for the company and the technology sector, but for the world. His death of Pancreatic cancer at the age of 56 was a loss for which much of the world mourned. Some predict that jobs death will end Apple’s long reign over the personal electronics subsector.

Research in Motions  Tumbles

Research in Motion (RIMM), the developer of the once popular smartphone the blackberry began a long tumble into becoming what could eventually be obsolete. The Blackberry, after a number of models that consumers found difficult to use, has continually lost market share to Apple’s iPhone and Google’s Android, both of which offer more and easier internet access and application options that tend to appeal to a wider audience. The company’s share price has fallen over 76 percent over the course of 2011 as investor become increasingly bearish on the future of the Canadian company.

Tech IPOs

The investment craze over tech IPOs could be said to have officially begun this year. Facebook’s announcement of their IPO was a hot topic throughout the year, though the company will not officially be available to the public until 2012.

IPO hungry investors though had no shortage of options this year, even if there was a shortage of profitable companies hitting the market. The company that seemed to set the trend was LinkedIn (LKND). The business networking site was valued at $4.5 billion in spite of not yet being profitable, prompting discussions of a potential tech bubble.

Many debated the possibility of a tech bubble, but it didn’t stop investors from eating up IPOs on their first days out. Since that point, Zynga (ZNGA) and Groupon (GRPN) have both gone public, valued at $7 billion and $13 billion respectively. Investors raised Groupon near $700 million on its first day in trading.

Production Chains of Interrupted by Inclimate Weather

Among the things 2011 will be remembered for will be its unusual and dangerous weather. East coast earthquakes and snow on Halloween were nothing compared to the terrible disasters endured in Japan where a March earthquake and resultant tsunami devastated much of the nations infrastructure and economy. A massive nuclear explosion put the population in considerable danger while forcing many businesses and factories in the region to close. The result was thousands of technology companies having to disrupt their supply chain with the nation in disarray.

This led to shortages for companies creating consumer electronics and automobiles as well as biting significantly into the bottom line of Japanese tech makers.

Later in the year, massive rains and flooding in Taiwan would have a similar affect. Nikon (NINOY) will remain closed until 2012 while Sony (SNE) estimated $1.2 billion in annual losses from the floods.

Social Networking is at Center of Middle East Rebellion

Rebellion spread across the Middle East after Egyptians began rebelling against the leader Hosni Mubarak. The hundreds of thousands of protestors were connecting over social media sites from Twitter to Facebook, showing the world new uses for social networking technology. The protestors were able to accurately depict and provide moment-to-moment coverage of the events and attitudes in Egypt in a way never before seen. Eventually, Egyptian leaders cut off Internet and mobile service to minimize communication and organization.

Netflix Loses Out

Once trading at over $300 per share Netflix (NFLX) has been a technology sector darling for quite some time. That all changed late this year; however, after CEO Reed Hastings announced changes in services and prices that resulted in a costumer outcry. The decision to divide the DVD and digital streaming businesses while charging more caused the company to hemorrhage as many analysts to question whether the company has what it takes to recover. Today, Netflix is trading at just over $72 after falling from its peak of $304.

Hewlett Packard Runs Into Trouble

Hewlett Packard (HPQ) continues to lose out as its struggling manufacturing division and mismanaging beneath former CEO Leo Aoptheker. His decisions as CEO were widely reviled, including choices to mix up top management. Apotheker was removed after only a short time and replaced by Ebay’s Meg Whitman. Even with the addition of the proven top notch CEO, the company is down close to 40 percent for the year.

Microsoft Buys Skype for $8.5 billion

The decision for Microsoft (MSFT) to purchase Skype for $8.5 billion in May led to plenty of head scratching. Skype, which while pervasive and popular has been unable to turn a significant profit, seemed an odd choice for the company. For its part, Microsoft has declined from its status as tech darling after the release of a few too many consumer flops. Preferences for Apple products and the failure to produce sufficient imitations without overspending on Research and Development have caused many investors to turn away from Microsoft.

The purchase of Skype hasn’t help matters and came off more a play to get in on the communication shift late in the game than it did an inspired acquisition.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 112.18 -1.77 -1.55 35,886,990
FNGN Financial Engines Inc. 28.83 -0.78 -2.63 134,889
GRPN Groupon Inc. 5.10 -0.16 -3.04 5,628,713
HPQ HP Inc. 15.39 -0.10 -0.65 9,794,740
MSFT Microsoft Corporation 57.40 -0.63 -1.09 25,463,536
ZNGA Zynga Inc. 2.81 -0.01 -0.35 13,107,142

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