Microsoft’s answer to Google Glass and Apple iWatch

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Google’s rolling out Glass and Apple’s (hopefully) got some iWatch and other new form factors and tricks up their own sleeve. Meanwhile, Microsoft is still trying to figure out how to sell more than one out of every 25 phones in the smartphone industry.

Microsoft MSFT -0.22% is down today on the news that it’s buying up most of Nokia’s NOK +0.39% major handset assets and businesses. Typical Steve Ballmer kind of acquisition, as he looks backward and skates to where the puck was this time five years ago.

Back in 2007 and 2008, I couldn’t have been more bullish on the smartphone sector, as the iPhone and then Android hit the mass market. Microsoft rolled out their Zune music player and then their toy-like Kin mobile phone as Apple and Google created a new trillion dollar industry with easy-to-use, functional smartphones.

I bought MSFT calls last week on news that Ballmer was out of there and I am surprised this morning to find he’s still out there making blundering strategic decisions with shareholders’ money.

On the other hand, I do like the fact that MSFT is at least buying NOK while it’s down 90% plus from its all-time highs. These assets and businesses that Softee’s buying from Nokia today would have cost 5-10x the price just five years ago. Also, the $7 billion plus in cash that Microsoft is paying for Nokia is equivalent to less than 1/10th the cash that Softee has on the balance sheet right now. And the company will generate $7 billion in cash in the next 10 weeks to replace that which they just spent.

And if the new CEO, whenever he gets there to replace Ballmer, finally gets in power, there’s actually a lot of potential for leveraging the huge Nokia distribution system that enabled the company to sell hundreds of millions of phones around the globe every year for the last decade. Hey, it could be worse — Ballmer could have paid $7 billion for Blackberry’s assets. Blackberry remains, as I’ve said for four years now, doomed.

I bought a small position in MSFT calls last week. I’m going to add another small tranche to that position today, giving myself out into January of next year.

But I think we’ve got plenty of other meaningful long-term positions that have made us huge money and are likely to continue to make us bigger money than MSFT and my MSFT calls are a trade — not an investment.

Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at TradingWithCody.com, which is not affiliated with MarketWatch. At time of publication, Cody was net Google, Apple and Microsoft. Follow Cody on Twitter at twitter.com/codywillard.

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Cody Willard

Founder, CEO & Chairman at Wall Street All-Stars, LLC

Cody Willard is the founder of Wall Street All-Stars and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and writes TradingWithCody.com. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. He wrote a monthly investment column for The Financial Times as well as columns for TheStreet.com and was a regular guest on CNBC’s Kudlow & Company from 2004 to 2006. Cody’s stock picking ideas and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.