Comfort Zone Investing: A Big Red Flag or a Little One?

Filed under: Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Motorola (MOT), Nokia Corp. (NOK), Comfort Zone Investing

Investors always look for good things to happen in stocks they own. Things like better than expected earnings, new contracts or a breakthrough discovery that will convert to better sales and profits. But they should also look for red flags, troubling developments within a company that could spell lower earnings in the future, even if they start with the opposite intent.

I'm reminded of that as I read about Microsoft (MSFT) getting into the mobile phone business. Of course, management thinks it will create more sales and profits, else why would they enter one of the most competitive markets on the planet? The problem (the red flag) is that there are already too many mobile phones with every type of application available and profit margins are much slimmer than in software. What can Microsoft add to this market that doesn't exist?

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Comfort Zone Investing: A Big Red Flag or a Little One? originally appeared on BloggingStocks on Sat, 16 Oct 2010 10:30:00 EST. Please see our terms for use of feeds.

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