As investors are getting jittery about Apple's forthcoming results, some are returning to its old nemesis, Microsoft, with one hedge fund snapping up a $2bn chunk of the software maker's shares.
Apple has spooked investors recently, with many market watchers predicting that its latest set of results – due out in the US tonight – will show a dip in profitability. The firm has seen blockbuster hits such as its iPhone and iPad have their market leadership eroded by an in-flux of cheaper – and in some cases more powerful – Android-based alternatives.
But if Apple is to get back its mojo, it needs to forget about producing the next eye-popping device, said Victor Basta, managing director of Magister Advisors.
“If, as some are forecasting, Apple’s device sales are disappointing, the very worst thing the company could do is double down on device innovation,” he said.
Apple has long been rumoured to be building a smart watch, dubbed the iWatch. But Basta insisted Apple should focus more on its software and payments, taking a leaf from Amazon's book.
“The right thing for Apple to do is to broaden themselves out, serve their huge community of credit card enabled customers, and focus on micro-payments and software,” he added.
While some investors are awaiting Apple's results with white-knuckled terror, others have sounded a rallying cry for software maker Microsoft. It has been under a different type of pressure to Apple, with many market watchers concerned Microsoft had missed the boat on the shift to mobile.
However according to the Wall Street Journal, chief executive at hedge fund ValueAct Capital Management, Jeffery Ubben, told an investor conference that it had bought $2bn of Microsoft shares – just less than one percent of the company.
Ubben is reported to have claimed the software titan has been grossly overlooked by investors, and that its position as a dominant software firm – given its strength in the enterprise – would see it win out in the long term. The announcement helped boost the firm's share price by three percent, over the $30 mark.
Last week, Microsoft confirmed its chief financial officer, Peter Klein, is set to leave the firm after three years. The announcement was made as it posted steady sales growth amid worsening PC sales.
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