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It was a bad week for the technology sector with some of the biggest companies seeing significant declines. But Microsoft (MSFT - Analyst Report) managed to hold its own, mostly because it reported a really good quarter. 

Could Facebook Be On Its Way Down?

Facebook (FB - Analyst Report) shares have grown increasingly volatile, as seen from the sharp drop in prices following a research paper by a couple of Princeton University students. The paper, which has put forward a theory that Facebook could become irrelevant in three years, is still in peer review, but this did not stop the news spreading or the negative reaction to it.

Facebook itself has said that the theory, based on MySpace usage trends and Google queries for Facebook is full of flaws and that the same theory, if applied to Princeton itself, would indicate that the university would run out of students by 2020.

Has Yahoo Finance Met Its Match?

Bloomberg has announced that Bloomberg videos attracted more visits than Yahoo Finance videos in December. Yahoo Finance is one of Yahoo’s (YHOO - Analyst Report) most successful properties, having beaten every other peer in the space. But most of this success has come in the sphere of news stories where Yahoo has excelled. Bloomberg stated that its information was based on ComScore Media Metrics.

As Internet usage patterns undergo a change, it is expected that videos will assume a more important role. I personally feel that finance stories are better read than listened to, since they allow you to skim, dwell on parts and go back when required, not to mention the fact that they require less bandwidth. It appears that Mayer saw this coming and started preparing for it (remember the appointment of Katie Couric and the increased focus on original video content).

Note that Yahoo recently made some changes to Yahoo Finance that were not well taken by users whereupon it removed the changes. This could also have affected numbers in December. Shares dipped sharply despite the fact that Yahoo remains number one in terms of desktop web traffic in the U.S. according to a ComScore report.

Microsoft Showing Good Execution

Microsoft reported a strong December quarter and its “Devices and Services” strategy appears to be on track. Since the tablet segment of the market is its main threat (and challenge), Microsoft is investing heavily here. Tablets have been eating into the consumer side of its business, particularly with respect to the emerging BYOD trends at the corporate level and consumers in emerging markets adopting tablets as their first computing device at the individual level.

Microsoft is dealing with the challenge in two ways. First, on the software side, it has adopted the SaaS model wherever possible to sell its business class software in order to ensure that enterprises remain dependent on it. It is also tying up with large enterprises to ensure that their purchases don’t move away from Windows. To target the SMB level, it has tied up with GoDaddy for the sale of its business-class software into the segment.

Second, it has gone all out to pick up share in the tablet hardware segment itself. Not only does this help enterprises stay with Windows (since Microsoft now has a good product in the segment), but it also helps to generate slightly stronger margins. Microsoft is yet to name the magic number at which this business could break even, but it appears very focused.

 Company

Last Week

Last  6 Months

AAPL

-0.32%

+23.83%

FB

-5.49%

+60.10%

YHOO

-4.77%

+34.86%

GOOG

-2.63%

+26.94%

MSFT

+0.39%

+16.41%

INTC

-2.50%

+6.66%

CSCO

-2.16%

-12.94%

Other stories you may have missed-

iWatch May Be Here Sooner Rather Than Later: Korean news site Digital Daily posted, then rapidly removed an article about LG winning a contract from Apple (AAPL - Analyst Report) for plastic OLED displays for a smart watch product. Volume production of an initial 2 million units will start in July, indicating that the iWatch should launch by year-end.  

Intel Gets More Focused: The rumor mills proved right for a change, as Intel (INTC - Analyst Report) announced that it was selling Verizon the OnCue TV business that failed to take off. Intel apparently does have valuable technology that somebody like Verizon could use. Separately, Intel also announced that it was trimming its global workforce by 5% in order to contain operating expenses.

Cisco Gets Serious About Consulting: Networking giant Cisco (CSCO - Analyst Report) is increasing focus on Consultancy services as its core routing and switching business sees persistent weakness. Last week, the company announced consulting services in the areas of security and cloud computing. This didn’t of course happen suddenly. For some time now, Cisco has been toying with initiatives in data analytics, software-defined networking (SDN) and the "Internet of Things”.

Icahn Attempts to Split eBay/Paypal

IBM Sells Server Business to Lenovo

Netflix Reported Solid Results

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