There is a global movement among the world’s governments to crack down on cigarette smoking. Investors should not be distracted by a legal win in recent news for U.S. tobacco companies: governments around the world are proposing and passing tobacco regulations.

This interplay between societal health issues and individual rights leads to compromises that challenge the outlook for tobacco company profits. In light of this, investors should demand low valuations. Unfortunately, many of these stocks are trading at too high a valuation to compensate investors for these risks.

Tobacco is Discretionary, Too

Tobacco products are viewed as recreational by some and additive by others. The truth is that some customers can curb their consumption in hard times. Thus, the idea that tobacco is an amazing recession-proof industry is faulty.

Philip Morris’ (PM) third quarter financial results demonstrated how tobacco products can be hit by an economic slowdown. Shipments of Philip Morris cigarettes to Argentina, Brazil, Colombia, Mexico and Canada fell 4.9% in the third quarter. Worse yet, shipments to European countries like Spain, Italy, France and Portugal declined eight percent.

Philip Morris CEO Louis Camilleri said, “Despite the difficult comparisons in the third-quarter, we remain confident that the fundamentals of our business are solid as a whole, which is testament to our progress, especially in our Asia and EEMA Regions.”

However, in contrast to these declining sales, Philip Morris has seen strong growth in Asian countries like Indonesia, Thailand and Vietnam. Sales in these Asian countries overwhelmed Japan’s declining sales for a slight 0.6% sales growth for Asia. The shipments of Philip Morris to the EEMA region (Middle East, Eastern Europe and Africa) rose 3%. To continue reading, click here.

Austerity trends have arrived for companies in the Code Division Multiple Access (CDMA) business. Weak demand for network equipment and rising competition plagues the sector. The effects of declining demand in North America for network gear that runs on CDMA have been terrible. The entire sector is weak, but some companies are more vulnerable than others.

Recently, Alcatel-Lucent (ALU) reported second quarter results that showed a $312 billion loss. Its sales fell 7.1% from the period a year ago to about $4 billion. Alcatel-Lucent’s revenue from North America, which accounted for 39% of sales, fell 8.3% to $1.7 billion during the quarter. Alcatel-Lucent posted operating margins of 4% at the end of 2011, while its rival, Sweden-based Ericsson (ERIC), managed a margin for underlying earnings of 11.6%. China’s Huawei reported an operating margin of 15.8% in 2010, the last year for which figures are available.

I believe that Alcatel-Lucent is significantly undervalued at its current price of around $1 per share, but I don’t believe it is certain to grow in the next few years. While its rivals such as Cisco (CSCO), Nokia (NOK), Siemens (SI), and Ericsson are coping in a deteriorating macroeconomic environment, Alcatel-Lucent is going through a painful program to accelerate its transformation and reduce costs in order to keep ahead of market pressures.

Alcatel-Lucent may not prosper for several reasons. First, the CDMA business is disappearing. Verizon (VZ), the market leader in the U.S., Second, Alcatel-Lucent is faced with increasing pressure from its telecom vendor rivals and the harsh global economy. is phasing it out. To continue reading, click here.

Recently, Microsoft (MSFT) announced that it has finalized a cross government licensing framework with the New Zealand Government’s Department of Internal Affairs. The agreement will span for a period of three years.

The biggest advantage that this will have for the government is that it will save it a substantial amount of money. The total amount of money that the New Zealand government hopes to save through this collaboration is $119 million. In addition, it also provides a higher degree of flexibility as well as simplicity. It will also serve as a way for the New Zealand government to modernize its information technology and improve the efficiency of its systems. These advantages are all in line with the New Zealand government’s broader strategy. The new framework that Microsoft is introducing will cover new cloud based software as well as older and more traditional software. This is an important step forward for the New Zealand government as it has realized that improved technology is the way forward.

The new deal also serves to illustrate that Microsoft remains a force to be reckoned with when it comes to technological domain. It creates a big media splash which will likely impact Microsoft stock in a very positive way. The successful outcome of the New Zealand deal will show other countries that Microsoft can integrate its products smoothly into different business systems. The deal also improves Microsoft’s global image, making it more attractive as an investment.To continue reading, click here.

In recent remarks, David O’Reilly, CEO and chairman of Chevron (CVX) until January 2011 and now chairman of the National Petroleum Council, indicated he is betting against U.S. oil independence based on shale extraction. O’Reilly said, “I do believe that we will still be importing oil 20 to 25 years from now, and that is one area of vulnerability we have in our supply system,” citing weakness in the current infrastructure and a lack of economic scale. O’Reilly’s view partly explains why Chevron is moving slowly on entering unconventional plays in the lower 48 states, which I believe is ultimately to Chevron’s detriment.

Chevron’s reluctance to participate in shale plays puts it behind all of its U.S. based competitors. Marathon Oil (MRO) is betting heavily on shale to fuel its growth. Exxon Mobil (XOM) is now the largest producer of natural gas in the U.S. following its acquisition of XTO Energy in 2009. It was not until February 2011 that Chevron acquired Atlas Energy to obtain its first foothold on U.S. shale gas, though the deal was nowhere near as large or as successful as Exxon Mobil’s acquisition of XTO. As of the end of 2011, Chevron owned 700,000 acres in the Marcellus and 600,000 acres in the Utica, but is apparently not very excited about the prospects here as these plays are not even mentioned in the company’s first quarter earnings presentation.

If Not Drilling in the U.S., then Where?

Chevron’s strongest area of focus remains its natural gas projects, primarily centered in Australia, where it operates the Gorgon and Wheatstone projects, among others. To continue reading, click here.

One of the leading independent energy companies leading the way in the exploration and development of natural gas liquids (NGL) is Devon (DVN). While other energy companies are searching out alternative resources because of the downward pricing of natural gas, Devon is going for the liquid.

This is a smart move especially when analysts are expecting this company’s growth, due to NGL, to be close to 13% this year. Of course NGL is not Devon’s only energy resource to bring to market. The company is expecting growth of up to 24% from its oil plays. In the most recent quarter, the company reported record production of 694,000 barrels of oil equivalent (BOE) per day in the most recent quarter, up 10% from the first quarter of 2011. Devon is a company that I believe investors should not just keep a keen eye on, but own the company while watching its phenomenal growth.

Two of Devon’s competitors, Apache (APA) and Anadarko (APC) are in for a surprise when Devon’s plans finally begin to take hold. Lesser competitors such as Cabot Oil & Gas (COG), Comstock Resources (CRK), and Canadian Natural Resources (CNQ) will also need to be on their toes as Devon begins taking action on its lofty goals. The company has set a goal to spend $1 billion more than originally planned for oil exploration, or close to $6.5 billion, with expectations of increasing its oil and gas production by 6% to 8% on an annual basis over the next five years.To continue reading, click here.

EMC (EMC) and Verizon (VZ) have just announceda new cloud computing partnership that will involve EMC, the giant data storage company and Verizon’s managed IT infrastructure subsidiary, Terremark. Terremark will provide standard offerings in its private cloud business on EMC infrastructure for public and hybrid cloud deployments by its customers. In addition, the two companies are expected to work together on the development of new cloud-based services and products that use EMC storage, backup and replication. Verizon paid $1.4 billion last year for Terremark as an entry into the potentially lucrative infrastructure and cloud services business. The companies have been working together for almost 10 years now.

Earlier, EMC reported strong results for the first quarter and this is the ninth consecutive quarter in which the company has achieved growth in double digits for revenue, EPS and net income. Revenue for the first quarter was $5.1 billion, an increase of 11% on a year on year basis and net income rose by 23% to $587 million. First-quarter EPS was $.37 a share an increase of 29% over the figure of $.27 a share in the same quarter of the previous year. Operating cash flow was $1.7 billion and free cash flow amounted to $1.4 billion. The company ended the quarter with $10.7 billion in cash and equivalents. The revenues were divided roughly equally between the United States and the rest of the world. The company reported strong customer demand for its leading mid-tier storage products portfolio3 while the Isilon scale-out NAS business nearly doubled its revenue .To continue reading, click here.

It could be a great time to invest in Oracle (ORCL) after CEO Larry Ellison announced that the company would debut its much anticipated cloud computing software next week. The stock is currently trading at around $26, staying in the same $10 range or so for the last decade. Based on the new cloud software rolled out by the charismatic Ellison, as well as favorable buzz over the safety of the always-consistent stock, I think Oracle could be poised for a solid rise.

The debut of its cloud software – which, according to Ellison, would give Oracle a significant leg up over competitor SAP (SAP) – represents a significant step up in technology for the tech giant. The concept of cloud computing, which has had a meteoric rise over the last few years, is having data access from pretty much anywhere, as opposed to locating data on a physical server. One example of cloud computing most are familiar with is Google’s (GOOG) Google Docs, which allow users to work on documents in the “cloud,” wherever they are. Users are then able to come back to their documents in other places at other times. Cloud software even allows users to work collaboratively in real-time on the same document, since it is in “the cloud” and not based in a physical server room based in any one location. PCMag explains cloud computing as “having every piece of data you need for every aspect of your life at your fingertips and ready for use.” To continue reading, click here.

Microsoft (NASDAQ:MSFT) has reported a marginal drop in earnings for its fiscal third quarter ending March 31, 2012, on a year-on-year basis but an increase in revenue from sales of Windows software and business products. Revenue increased from $16.4 billion to $17.41 billion while revenue dropped marginally to $5.11 billion (earnings per share of $.60 per share) from $5.23 billion (earnings per share of $.61 per share) in comparison with the same quarter the previous year. The consensus EPS estimate was $.58 per share. Almost by default, Apple (AAPL) and Google (GOOG) have become the glamor tech stocks while Microsoft somewhat unfairly is regarded as just another boring technology investment. While Microsoft may not move as fast as I would like a number of important initiatives have been launched in that could be the second coming of Microsoft on Wall Street. It is worth examining some of these initiatives in detail.

Easily the most ambitious of Microsoft’s initiatives is the radically different Windows 8 that is expected to be launched toward the end of the year. Windows 8 will be a real game changer for Microsoft and many people expect that the upgrade cycle that this software will launch will rival Windows 95, which really pushed the company into the big time. It is important to remember that Windows 8 is not just another Windows upgrade but a genuinely comprehensive and oppressive attempt to provide a unified software platform for every single bit of hardware including tablets and mobile devices.To continue reading, click here.

Typically, when investors are choosing where they want to put their money, they look for options that offer at least some long term appeal. In the biotech market, long term appeal is favored more so than in other industries, mostly because there are few drugs that work well one day, but are obsolete the next. For instance, few would make money from a company that develops a drug to treat kidney disease, only to realize a few weeks down the road the drug actually stops the kidneys from working. A failure is usually an absolute failure in the biotech industry, especially when it comes to pharmaceuticals.

However, there is one scenario few have considered that I think is worth examining. It is the idea that a particular pharmaceutical development could make other drugs obsolete. I am not saying this is going to happen any time soon, but I think it is worth considering if you are weighing long-term investments.

Recently, there have been a few drugs in development concerning weight loss. Weight loss drugs fell out of favor over the last several years because of pharmaceutical disasters, but the FDA has begun considering this sort of treatment again and at least two companies have decided it is the direction in which to head. Both Vivus (VVUS) and Arena (ARNA) are focused on weight loss drugs, both of which could be approved in the near future. To continue reading, click here.