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By Jason Stipp and Jeremy Glaser | 01-23-2015 09:00 AM

4 Tech Firms in Transition

Earnings reports this week showed how Netflix, IBM, Microsoft, and eBay are thinking about their futures. Plus: Europe's QE is no cure-all.

Jason Stipp: I'm Jason Stipp for Morningstar and welcome to The Friday Five, Morningstar's take on five stories in the market this week. Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: First this week, after what seemed like endless discussions, the ECB finally announces it's QE program. What's the takeaway?

Glaser: This definitely is the biggest story this week, and it could very well end up being the biggest story of 2015.

The ECB will be purchasing 60 billion euros worth of bonds--government debt and some other bonds--every month starting in March and going until at least September 2016. This program is a little bigger than the leaked program and what a lot of investors had been expecting, and it shows that the European Central Bank felt that it had to do something. Given how low inflation was running, given how weak the economies have been--even though they won't admit that they are focusing on economic growth--they had to try to kick-start the economy in some way.

I think that this may have some impact, but it's probably not going to be a cure-all for everything that's happening in Europe. I talked with Bob Johnson earlier this week about it. Europe really has to focus on their structural issues--labor market reforms in France and Italy, dealing with some other underlying issues--to really make the economies look stronger. Just doing a quantitative easing program, just having a cheaper euro alone in a vacuum, is not going to get them all the way there. So this might be one step toward Europe finding its way out of recession, but it's not the only thing that needs to happen.

Stipp: In earnings news, we got several reports this week. Netflix was one of those that continues to be on a wild ride. We saw that again this week as it spiked up after reporting good earnings.

Glaser: We did, and this is one of a few stories this week that showed tech firms in transition and really thinking about their future.

Netflix did jump this week, based on a few things. The first is just that they had a good quarter; they added more customers both in the United States and outside the United States than they expected. But one of the big stories is that they now think they are going to be able to complete their global expansion in two years, and that they are going to be able to stay profitable during this.

Neil Macker, who covers Netflix for us, thinks this is a sign that Netflix is changing the way it's thinking about its expansion, and maybe it is being a little bit more conservative. Instead of coming in with huge blockbuster content deals in every country, they are going to focus on the properties that they own themselves, the original content, and things they already have the worldwide distribution rights for. This is a more conservative way of being able to enter these markets as soon as possible.

I think for Netflix investors, an open question had always been, are they going to be able to execute this global expansion in a way that will maintain their profitability, or is it really just a U.S.-only product. They are showing us some signs that they are going to be able at least to make a play outside of the United States.

But there really is no margin of safety baked into the stock right now, particularly after this big jump after earnings, and investors might want to wait for better entry point, even if they think that Netflix has a bright future.

Stipp: IBM really delivered this week on what they said was going to be a really rough quarter. Their results didn't look good at all.

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