Two Top Stories in Tech that You Should Consider: Apple Inc. (AAPL) and Facebook Inc (FB)

Naturally, we haven’t really seen any drastic changes to growth or product/services and the stock has risen since most of these executives left the company. However, keep in mind, when Steve Jobs passed away Apple’s stock more than doubled. But now concerns regarding innovation and vision have pushed its shares lower.

This is a scenario we will have to watch with Facebook. An internet based company moreso than a hardware company must innovate daily to “stay cool.” Facebook probably has a short-term list of services and products for the market, however what will happen in the next six months or next year due to these changes. At this point we don’t know, but the fact that these talented individuals are leaving worries me enough not to pay a price/sales ratio of 13.0 to invest in Facebook.

Conclusion

In my book, Taking Charge With Value Investing (McGraw-Hill), I talk in detail about knowing how to assess news and rumors. Sometimes these rumors, which then create fear or momentum, can create value for both long and short investors. It is important to know and learn how to assess the meaning of such developments.

However, with both of the companies above, I believe the news is quite meaningful. Apple has been sitting on tens of billions in cash for years, and Facebook is still a company that is trying to create an identity. A hike in Apple’s dividend could have a great result on the performance of the stock, and a changeup in management could also have a strong reaction on Facebook (one way or the other). Therefore, it might be wise to consider these developments and appropriately price them into the valuation of both companies.

The article Two Top Stories in Tech that You Should Consider originally appeared on Fool.com and is written by Brian Nichols.

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