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Information Technology Sector Analysis: Stocks and Recommendation

This presentation provides an overview of the Information Technology sector and includes an analysis of various stocks. The recommendation is to sell Apple and Dell (VMware), and buy Arris International. The presentation also covers Alphabet, Cognizant, Microsoft, and Vantiv.

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Information Technology Sector Analysis: Stocks and Recommendation

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  1. SIM Stock Presentation: Information Technology Ellie McCabe, Steven Munn, Jordan Kopman, Matthew McGahan, Noah Mitchell

  2. Table of Contents • Sector Overview • Recommendation • Stocks • Alphabet • Apple • Arris International • Cognizant • Dell (VM Ware) • Microsoft • Vantiv • Conclusion

  3. Sector Overview

  4. 22.82% 23.60%

  5. Recommendation

  6. Recommendation • Sell 14 basis points of Apple to end at 5.00% cap • Sell VMare completely • Use 278 basis points to buy Arris International

  7. Stock Information

  8. HOLD Alphabet, Inc. Alphabet, Inc. is an American multinational conglomerate created in 2015 as the parent company of Google. The company is located in Mountain View, California. Alphabet is the parent company to Google as well as many start-up type companies including Waymo, Verily, and GoogleX.

  9. HOLD Apple Inc. Apple Inc., founded in 1977 in California, is a technology company that designs, manufactures and markets mobile communications and media devices, personal computers and a variety of software applications. Apple also provides services and network solutions, as well as offers third-party applications and digital content.

  10. HOLD Apple Inc. • Apple stock price has been up 45% on the year

  11. BUY Arris Intl. Arris International Plc is a telecommunications equipment manufacturing company that provides cable operators with high-speed data, video and telephony systems. The company’s innovations combine hardware, software, and services across the cloud, network, and home to power TV and Internet for millions of people around the globe.

  12. BUY Arris Intl. • Increased number of broadband subscribers • Increase in connected devices per household • Increase in data usage per household • High-tech products demanding more advanced communications equipment

  13. BUY Arris Intl. • Set-top boxes are decreasing in U.S., but increasing worldwide • Pressure from over-the-top media and increased competition from between service providers are resulting in demand for new set-top boxes.

  14. BUY Arris Intl. • Set-top boxes are decreasing in U.S., but increasing worldwide • Pressure from over-the-top media and increased competition from between service providers are resulting in demand for new set-top boxes.

  15. BUY Arris Intl. • Service providers projected to have higher capital expenditures in order to meet customers demand of higher bandwidth and faster speeds • ARRIS offers DOCSIS 3.1 modems which support gigabit speeds.

  16. BUY Arris Intl. • Service providers projected to have higher capital expenditures in order to meet customers demand of higher bandwidth and faster speeds • ARRIS offers DOCSIS 3.1 modems which support gigabit speeds.

  17. BUY Arris Intl. • In the process of acquiring Ruckus Wireless from Brocade for $800 million • Allows ARRIS to expand into enterprise Wi-Fi market and capture cost synergies

  18. HOLD Cognizant Cognizant is an Information Technology consulting firm based out of Teaneck, New Jersey. Led by Francisco D’Souza, Cognizant has experienced rapid growth since the crisis. Cognizant has four major business lines: Healthcare, Financials, Manufacturing/Retail/Logistics, & Other (Other includes energy, consumer goods, communications, media, etc.).

  19. SELL Dell (VMware) VMware, Inc. is a subsidiary of Dell Technologies that provides cloud computing and platform virtualization software and services.

  20. SELL Dell (VMware) • Cannot compete in public/hybrid cloud realm

  21. SELL Dell (VMware) • Cannot compete in public/hybrid cloud realm

  22. SELL Dell (VMware) • Dell ownership is potentially threatening to business activities

  23. HOLD Microsoft Microsoft Corporation is an American technological company located in Redmond, Washington. The company focuses on the development of computer software, consumer electronics, personal computers, and services.

  24. HOLD Vantiv, Inc. Vantiv, Inc. is a payment processing and technology company located in Cincinnati, Ohio. Led By Charles Drucker, the firm was founded in 1971 and currently employs 3,600 people. Vantiv is the largest U.S. merchant acquirer by general purpose transaction volume.

  25. Conclusion

  26. Conclusion • Keep sector at current weight in SIM portfolio (slightly underweighted) • Sell 14 basis points of Apple to end at 5.00% cap • Sell VM Ware completely • Use 278 basis points to buy Arris International

  27. Questions?

  28. Appendices

  29. Alphabet, Inc. DCF

  30. Apple, Inc. DCF

  31. Arris Intl. DCF

  32. Cognizant DCF

  33. Dell (VM Ware) DCF

  34. Microsoft DCF

  35. Vantiv, Inc. DCF

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