2008 - the year to be 'Boring'?

I'm meeting Bill Gates next week for the first time. Although I have written quite a few critical articles about Microsoft in the last 20+ years, Gates has clearly had a huge effect on my life (and everybody else involved in IT).

When founders step down from their executive roles (as Gates will do in a few months time) the dream is to be able to say "I leave the company in good health" and for the analysts to agree!
Given last night's Q2 results (see Microsoft bucks tech trend in Businessweek and Bullish Microsoft jumps 10% in today's FT), it seems that Gates has achieved the dream. These are excellent results which only a nit-picking analyst could criticise. Even if you strip out currency effects and take a pretty cautious line on revenue recognition on deferred revenue on Vista updates paid for but not installed, you are still talking a 12% revenue rise (compared to the 30% headline figure) That is at least twice the the most optimistic view of average market growth. Of course, what propelled Microsoft shares up 10% in after hours trading, was an equally positive outlook statement. We had the same good results and even better outlook from that other giant of the IT industry - IBM - last week. (see IBM Results lift cloud over IT sector - FT 14th Jan 08)

Compare and contrast that to Apple. (See Warning bells over Apple's iPod sales in the FT on 24th Jan 08.) Apple shares have taken a real hit this year. After hitting $200 at the turn of the year, they ended yesterday on $135 - down 32% on the year.

In the UK, I do note from my own portfolio that the two SITS shares that have fallen least this year are Capita and Sage. ie the only two Holway 'Boring' Award Holders. In the spirit that "Boring" is "Good", I'd have to put both Microsoft and IBM into the 'Boring' camp too. Let's face it, nobody could ever apply the adjective 'Boring' to Apple!

So maybe the lesson in all this is that, as the world economy enters its most turbulent period for many decades, Boring companies will yet again be the 'safe haven in the storm'?

Footnote - Those interested in following the Holway Portfolio might be interested to know that it has fallen 12% YTD - wiping out almost all of the 2007 gains. However, as I reported faithfully at the time, I had sold much of the portfolio in Q4 07 and reverted to cash - so much of the 2007 gains were locked in. For example I sold half my Apple shares in Oct 07 when I had recorded a doubling in the value of my shareholding since the start of 2007. This was a decision, I joke, that I got 'half right' - I should have sold the lot!