Sunday, July 24, 2011

Can Apple Co-Exist With Other Tech In a Portfolio?

Apple has fast become one of my largest holdings, and I may look to increase it yet again soon.
The reasons are simple: It records blowout quarter after blowout quarter. It's eating up market share in laptops, desktops and phones and it owns the budding tablet business.
But Apple's success is not without problems for my overall portfolio. There's an iCloud that comes with this silver lining.
I have two companies in my portfolio that compete with Apple to some degree: Adobe Systems and Synaptics.
Adobe, the more familiar name,  is the maker of creative software for professionals and consumers, the purveyors of Flash, and the creators of the ubiquitous PDF.
I have liked this company for a while. Working in the publishing business has shown me how indispensable some of its products are, whether it's Photoshop or InDesign or InCopy. Most publications use all of them, and switching to other platforms --  if possible -- is painful, requiring both a capital outlay and much training.
But Adobe has also landed itself in some nasty feuds with Apple.
The spat over Flash might not be particularly troubling to Adobe's bottom line. Flash makes up only a fraction of a percent of what Adobe earns.
But when Steve Jobs comes out and calls a company "lazy," people take notice. Analysts take notice. Investors take notice.
Is a bet on Apple a bet against Adobe?
I don't think so. While the two may have some overlapping products, each business has its own core. Adobe's is in its creative and business products, such as Photoshop, Illustrator and Reader. I think it can continue to grow with these products and expand their use as the web evolves.

Touchy subject
Synaptics is another story. You may have seen the name somewhere on your laptop. The company is a leader in touchpad technology. It rules the laptop market and indicated last quarter that investors can expect it to do the same in the smartphone market.
The non-iPhone market, at least.
Because Synpaptics is such a big supplier to Apple competitors in these areas, there are some who regard investments in the company as bets against Apple.
I'd owned Synaptics before I'd bought Apple, but this now has me wondering if the two companies can co-exist in my portfolio.
Is a bet on Synaptics really a bet against the growth of Apple, a much larger holding for me? Or is there enough room in the smartphone, tablet and laptop makets for these two companies both to prosper?

Stay tuned
Synaptics will report quarterly results on Thursday. We all know Apple crushed estimates for the same period.  I'll be interested to hear what the company reports and has to say about its future prospects. If I don't like what I hear, I may just flip that money into Apple.

Would you consider having these three tech names in the same 15-stock portfolio?

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