Money before innovation: Why Wall Street loves tech giants these days

No innovation? No sexy new products? Investors celebrate as six old-line companies churn out profits instead

The giants are back. The classic tech companies that make computers, hard drives, and productivity software are soaring on Wall Street. Meanwhile, that other tech giant, Apple, derided by the digerati for not blowing their impressionable minds recently, is kicking butt on the Street.

Interestingly, none of those stars have done anything terrifically exciting or innovative recently. What they've done is deliver the steak (dollars) investors are looking for, but without the sizzle the blogosphere loves (cool innovations).

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Apple and Microsoft, of course, both served up solid, if unexciting, financial results on Tuesday. But there's also Oracle and troubled Hewlett-Packard, which finally has a permanent chairman (chairwoman, actually), along with Western Digital and, believe it or not, Xerox.

A check of the charts shows that all six companies have done astonishingly well in the market in the last 12 months, adding anywhere from 20 to 40 percent to their share values, generally exceeding the overall rise of the tech-heavy Nasdaq index.

There's the other factor that two of those companies have in common: plans for massive layoffs that could well total 24,000 people by the time HP's Meg Whitman and Microsoft's Satya Nadella are done. You can never shed too much blood for Wall Street.

Apple's and Microsoft's cash machine spit out profits ever faster
Apple CEO Tim Cook, a man whose predecessor was the hardest act in business to follow, gets endless grief for not producing a spectacular new product every other quarter. That criticism may or may not be justified (let's see what happens this fall), but his company's recent quarter shows that the Apple cash machine is revving ever faster.

Its revenue was up 6 percent from a year ago, to $37.4 billion, while earnings per share, bolstered by share buybacks, soared 20 percent. Gross margins, a key indicator for investors, grew strongly to 39.4 percent from 36.9 percent a year earlier.

Last week, I wrote about the comeback of the PC. I focused on Windows PCs, but sales of Macs are soaring as well. Sales of Macs were up 18 percent, with 4.4 million sold. Indeed, revenue from Apple's computer sales wasn't far behind that of its iPad sales: $5.54 billion and $5.88 billion, respectively, a very healthy serving of steak.

Despite all the moaning about the "boring" iPhone, sales of that high-margin device were extraordinary: up 9 percent to $19.7 billion. Yes, iPad sales were disappointing, but tablet sales are slowing for everyone, says IDC, and that includes archrival Samsung.

Microsoft hasn't done anything that excites the digerati these days, and it's paying through the nose for Steve Ballmer's ill-conceived purchase of Nokia. Even so, sales in the quarter were huge: $23.38 billion, compared to $19.9 billion a year ago, with about $2 billion of the gain attributed to sales of Nokia products. But costs from the Nokia acquisition pushed down the company's profits by about 4 cents a share, or $360 million.

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