It’s a flattish to higher open, but we’v…
It’s a flattish to higher open, but we’ve got our two most volatile tech names of late, Cypress and Riverbed, both up more than 3%. Recall yesterday that I wrote the following about Riverbed:
Long-time subscribers know that I have been pounding the table on this one since it was in the low teens, but that most recently we were buying common and calls in the name around $32 a share. After having reported yet another blowout quarter since we got that opportunity to buy more at those prices, I’m not sure the market will give us another chance to get in down there. If hadn’t just recently been a buyer of this one, I’d take a look here. I’m holding my common and calls steady in this one for now given that we did buy lower recently.
The stock’s up nicely since I wrote that yesterday, but I still expect that Riverbed’s headed much higher in coming months and years. Here’s some more from me on Riverbed:
Companies are embracing the cloud because it offers advantages traditional storage just doesn’t. If you need more server capacity, you can add some instantly. The economies of scale in cloud means that not every company has to have its own data centers with full IT staffs; they can lease the services as needed instead. Most importantly, the uncertainty of upturns and downturns in the macro economy no longer mean an uncertainty in expansion plans.
When I recommended Riverbed to my RealMoney readers four years ago this month, I wrote: “Can you ever imagine a time when companies will use the Internet less? Then the issue of bandwidth usage starts to creep up in the form of increasing bills and upset accounting departments (who no doubt send emails criticizing heavy Internet usage).” UBS recently looked at 2010 data-center spending and compared that with the 1990s, noting that elevated data-center spending was a backward-looking indicator of the tech bubble. Cisco got a big multiple when storage became the buzzword; there’s no reason to think that the same won’t happen with cloud.The time to get in on a bubble is before it’s evident to everyone. A ramp-up in data won’t just be one or two times present levels. Based on the demand for spectrum and analysts’ projections, the Federal Communications Commission calculates data traffic to grow 35 times by 2014 from 2009 levels. There is no way to cope with the explosion in the number of devices and the kinds of ways we consume everything from music and PowerPoint to data sets and video without a robust cloud. The time to get long the cloud bubble is now — before Wall Street comes up with an ETF that owns data packets.==I’ve not done any trades yet today. Back in a bit with more.
