Is Wall Street beating up on Microsoft?
Goldman Sachs downgraded the software company on Monday and on Tuesday, Janney Capital Markets followed suit. Both firms brought the technology giant down to 'neutral' from 'buy' and said it's missing an opportunity to move its desktop offerings into mobile gadgets, including tablet computers.
At this point, CEO Steve Ballmer should be replaced because of the series of strategic missteps that he's made, said Janney Capital Markets analyst Saša Zorovi? on Tuesday's "Fast Money Halftime Report."
"It would be better for Microsoft to move on," said Zorovi?.
While Microsoft has done around 25 acquisitions over the past year, Zorovi? thinks it should acquire additional companies in the software area, specifically in cloud computing. Companies like NetSuite , Salesforce.com and Taleo would enable Microsoft to round out their portfolio on the enterprise side for cloud computing, he said.
Watch the video to see the full interview with Zorovi? on Microsoft—it starts at 1:55.
What's the Trade?
"I think there is going to be an uproar about the lack of performance there," said Jon Najarian, co-founder of optionMONSTER.com. "So I do think the clock is ticking for Mr. Ballmer, particularly with his old friend Bill Gates."
Najarian noted that Salesforce.com had a "phenomenal" run this year and doubts Microsoft would take it out right now. Joe Terranova , chief market strategist of Virtus Investment Partners, agreed.
UNUSUAL ACTIVITY: STEC
Shares of data storage company STEC jumped on takeover speculation Tuesday.
A month ago, options trader Jon Najarian saw a double bottom in the stock around 11. It's since held and the stock has been easing it's way up to 12. The stock is now putting in a double bottom at 12, he said and each time it gets there, the rumor mill starts turning. Institutions thinks something's going on through, as it traded six times full-day volume in the first three hours of trading Tuesday.
CHART OF THE DAY: HOME DEPOT
Goldman Sachs downgraded Home Depotto 'neutral' from 'buy' Tuesday, citing concerns over valuation.
hen Home Depot's chart is compared to that of the PHXL Housing Sector exchange-traded fund, Veracruz's Steve Cortes noted that for the last two months, the two traded in tandem. Starting in September, however, the HGW traded sideways while HD rallied higher.
Like Goldman, Cortes disagrees with HD's movement because historically, HD and HGX trade in tandem. Therefore, Cortes thinks HD is overvalued and doesn't think housing is strong. He's looking to short HD.
Patty Edwards , chief investment officer at Trutina Financial, owns Home Depot. She's also watching the valuation, but said the company is benefitting from the remodeling of foreclosed homes and wouldn't short the stock.
Watch the video to see Cortes' full commentary on Home Depot.
CALL TO THE FLOOR: RACKSPACE
Forbes named Rackspace CEO Lanaham Napier as one of America's 15 most powerful CEOs 40 and under. He joined the "Fast Money Halftime Report" for an interview Tuesday. Watch the video to see how it went.
CALL THE CLOSE
Jon Najarian of optionMONSTER.com likes the VIX breaking through 22 to the downside and the S&P through 1,150. He likes the squeeze.
Patty Edwards of Trutina Financial thinks Chicago Bridge & Iron is a buy at current levels.
Steve Cortes of Veracruz thinks the euro rally is "ridiculous" and recommends buying the US dollar instead.
Joe Terranova of Virtus Investment Partners likes the market right now.
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Trader disclosure: On October 5, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Steve Cortes is short (XLF); Steve Cortes is short (BAC); Steve Cortes is long German Bonds; Steve Cortes is short EUR’ Steve Cortes is short Mex. Peso; Jon Najarian is long & has sold calls in (HD); Jon Najarian is long & has sold calls in (COST); Jon Najarian is long & has sold calls in (GS); Jon Najarian is long & has sold calls in (MS); Jon Najarian is long (STEC) calls; Jon Najarian is long (MOS) calls; Jon Najarian is long (ERTS) calls; Jon Najarian is long (COCO) calls; Patty Edwards is long (GLD), (HD), (PGM), (COST), (BMO), (MSFT); Joe Terranova is long (EOG), (APA), (AAPL), (OIH), (VRTS), (XBI), (ARUN), (IBM), (XBI), (C), (ORCL), (PEP), (OXY), (SU), (JOYG), (RIG), (IBM), (HES), (RSH), (UPL)
For Sasa Zorovic
Janney Montgomery Scott may seek comp. for inv. banking services from (MSFT), (AAPL), (ORCL)
Janney Montgomery Scott is a market maker in (MSFT), (AAPL), (ORCL)
For Michael Taiano
Sandler O'Neill expects to receive or intends to seek compensation from American Express Co. for investment banking services in the next three months.
CNBC.com with wires.