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Do CEOs Have Their Heads In Clouds?

Monday, 23 Aug 2010 | 7:00 PM ET

Have you noticed across the nation it seems a growing number of CEOs have their heads in the clouds?!

We’re talking cloud computing – a trend that uses virtualization, multi-core processors and storage-area networking to turn computing power into a utility.

(Think of it as doing for computing what power plants did for electricity. Most of us don’t buy generators anymore – we pay a utility to deliver the juice more efficiently.)

Software: Inside the Cloud
A look at the top tech companies and whether the CEOs have their heads in the clouds, with CNBC's Jon Fortt.

What’s that mean for investors?

The tech trend has shifted the focus away from selling beefy hardware and software and toward selling services -- often delivered through a web browser or a smartphone app.

The pitch: customers won’t have to keep spending millions on servers, software licenses, and I.T. staff to maintain it all.

Instead -- just pay a subscription fee.

But this trade isn’t without risk. Though cloud may be the flavor of the month right now, just like Pets.com in the 90s -- profits are hard to come by.

That makes playing this space kind of like petting a dog you don’t know. It could go well but it could also snap and bite.

How should you game it?

I’d play it with Citrix and Red Hat , says Joe Terranova.

*Hear more about this trend from CNBC’s John Fortt. Watch the video above!




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Trader disclosure: On Aug 23, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (BX), (GOOG), (POT); Cortes owns (FCX), (SFD); Cortes owns (BHP); Cortes owns Crude Oil; Cortes is short (SPY); Cortes is short (XLF); Cortes is short Japanese Yen; Cortes is short U.S. Treasuries; Finerman owns (GOOG); Finerman’s Firm owns (HPQ); Finerman’s Firm owns (POT) calls; Finerman’s firm owns (WMT); Finerman owns (MOS); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Terranova owns (AXP), (C), (BMO), (V), (POT), (OXY), (GLD), (FCX), (APA), (SU), (XBI)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (DRYS)
Virtus Investment Partners own more than 1% of (EXR)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (XLK)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)

For Brian Kelly
Accounts managed by Kanundrum Capital own U.S. Dollars
Accounts managed by Kanundrum Capital own Swiss Franc
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (TBT)
Accounts managed by Kanundrum Capital are short the U.K. Pound
Accounts managed by Kanundrum Capital are short the Peso
Accounts managed by Kanundrum Capital are short (XLF)
Accounts managed by Kanundrum Capital are short (AFL)
Accounts managed by Kanundrum Capital are short (MCO)
Accounts managed by Kanundrum Capital are short (IAI)

Anthony Scaramucci
SkyBridge Capital and Scaramucci own (GD)

Mike Khouw
***No Disclosures***

Jason Trennert
***No Disclosures***

Nishu Sood
Deutsche Bank owns 1% of more than any class of common equity of (TOL)
(TOL) is an investment banking client of Deutsche Bank

Dan Eggers
Credit Suisse provided investment banking services to the subject company (CMS) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (CMS) within the past 12 months.

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (CMS) within the next 3 months.

Credit Suisse provided investment banking services to the subject company (PCG) within the past 12 months.

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (PCG) within the next 3 months.

Credit Suisse provided investment banking services to the subject company (SO) within the past 12 months.

Credit Suisse provided non-investment banking services, which may include sales and trading, to the subject company (SO) within the past 12 months.

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (SO) within the next 3 months.

Credit Suisse has received compensation for products and services other than investment banking services from the subject company (SO) within the past 12 months.

Credit Suisse provided investment banking services to the subject company (PGN) within the past 12 months.

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (PGN) within the next 3 months.

CNBC.com with wires.

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