Recommendation: Buy AMZN, AAPL, EMC, ORCL Sell VZ

VZ – Verizon Bought as a cash alternative Up ~$10/share Sell following iPhone announcement

Federal Chief Information Officer sees cloud computing as an IT solution to the cost inefficiencies of the nation’s IT infrastructure.

Mandated that agencies of the federal government institute a "cloud first" IT procurement policy

Looking to reduce the number of federal data centers by 40% by 2015. The goal is to shift $20B of the $80B/year federal IT budget to cloud

solutions.

From Business Week Right now, the cloud is small: It represented about 5 percent of

the $1.5 trillion in corporate information technology spending last year, ….

Cloud is real and is profoundly changing how companies buy computer technology

There's a saying in the technology industry: People tend to overestimate what will happen two years from now and underestimate what will happen in 10. Well, the next 10 years have arrived.

Current secular shifts in IT

Virtualization / Storage EMC/VMware

Cloud computing / SaaS- Amazon & Oracle

Mobility Apple

How Do We Play "IT"?

AAPL: Enter Enterprise

• AAPL: Enter Enterprise• CIO’s are adopting tablets – This is Apple’s inroad to enterprise• Next generation of corporate IT professionals in America use Apple

• Amazon: Disruptive Technology & Web Services

•

• EMC : More data will be created in the next two years than in history to date – IDC

• Oracle

Apple Company Profile

•Business profile: Apple designs, manufactures, and markets personal computers, computing and mobile communication devices, related software, and networking solutions.

•International vs. domestic: With $24.5billion in revenue for 2010, the Americas is the largest geographic section. Europe comes in second with $18.7billion for the same time period. The Europe and Asia/Pacific markets have 43% and 89% avg 2-year growth respectively as Apple enters new markets.

•Management quality: Excellent. Jobs, the COO and CFO have been managing the company since the late 1990s. Part of executive compensation is aligned with shareholder interests.

Prev Close:

339.25

1y Target Est:52wk Range:

199.25-364.9

Avg Vol (3m):

19,790,730

Market Cap:

311billion

P/E (ttm): 18.87EPS (ttm): 5.3Div & Yield:

none

Forward P/E:

12.9

Investment Information

Investment Thesis

•Catalysts:

1. Tablet- Deltoitte expects companies to purchase 10million tablet devices in 2011 (APPL has 75% market share of tablets).

•Tablet has been tested or deplowed at 80% of Fortune 100 companies. Medtronic has given 5,000 iPads to sales reps and SAP has bought 3,500 for company use.

•Industry tracker iSuppli predicts Apple will ship 43.7 million iPads this year and 63.3 million in 2012.

2. Next generation of IT professionals- as more young people become familiar with apple computers, they will request these computers in the workforce. Macs have less viruses, spam, crashes and need for upgrade compared to PC

SWOT Analysis

StrengthsBrand ImageiPhone and iPad run on same operating system Desktop/notebooks steadily increase revenueiTunes is largest music distributor in worldProduct release cycleProduct Design and Utility

WeaknessesComputer-Software Chief steps downA projected 50% of revenue will come from iPhone line by 2012Not shareholder-friendly, sits on cash instead of giving a dividend.Very controlling over products.

OpportunitiesMac App StoreLoyal customer baseApple TV

ThreatsSteve Jobs’ HealthCompetition introducing similar productsOver-priced productsGoogle

Profile: Amazon is an online retailer that offers a wide range of products. They also offer web services for start-up companies.

International vs. domestic: Revenue for North America hit $18.7billion in 2010. All other geographic areas reached $15.5billion. Average 2-yr growth was 35.62% and 31.68% respectively.

AWS contributed to $500million in revenue in 2010

Expected to bring in $2.5billion in revenue by 2014.

With companies who have their own hardware assets, servers might reach a max utilization of 25%. Since AWS only charges for what a company uses, utilization is close to 100%

Using AWS, a company will save security, upgrade, and personnel costs.

Prev Close:

165.53

1y Target Est:52wk Range:

191.6-105.8

Avg Vol (3m):

19,790,730

Market Cap:

74.69billion

P/E (ttm):

65.46

EPS (ttm):

5.3

Div & Yield:

none

Forward P/E:

12.9

Amazon SWOT Analysis

StrengthsBrand ImageLow-costs since company does not own retail stores.Superior customer service/ loyal customersAllowing 3rd-parties sellers on amazon.comLast quarter saw record sales of $13billion130 million active users (amazon.com)

WeaknessesComputer-Software Chief steps downOutsources deliveryMost of revenue from AWS has to be reinvested into hardware.

OpportunitiesAndroid App StoreBought LOVEFiLM (Europe’s Netflix)

ThreatsEvolution of media to digital formatsOnline sales taxIncrease in gas prices

Valuations

BEst Est BEst Net DebtName Market Cap (M) PEG Ratio FWD P/E FWD ROE % FCF Yld % Per Share LFORACLE CORP 165,669 0.990 13.9 22.0 7.5 (1.55)$ EMC CORP/MASS 55,356 1.056 15.4 11.5 8.1 (0.93)$ ADOBE SYSTEMS INC 17,731 1.210 13.7 15.4 6.2 (1.88)$ APPLE INC 324,723 0.667 13.2 35.3 6.2 (29.29)$ GOOGLE INC-CL A 190,690 0.772 14.7 20.7 3.7 (98.07)$ AMAZON.COM INC 76,242 1.069 29.5 19.0 3.1 (17.92)$

Valuation is relative AAPL vs HP - Are you willing to pay for growth?

Sector : Technology Industry Group: Software Current Holdings: GOOG, ADBE Target Sector Allocation: 15 Current Sector Allocation: Remaining Allocation:

Portfolio Placement / Recommendation