The ability to see into the future is priceless. While Research and Development (R&D) expenditures are critical towards developing new innovations, companies maintaining close ties to learning institutions like the Massachusetts Institute of Technology (MIT) should not be overlooked. Investors focused only on the products and services available today in their portfolio must take the time to consider which companies will be the thought leaders of tomorrow. (Learn more about R&D expenses, in our related article The Ins and Outs Of In-Process R&D Expenses.)

Future of Banking
Bank of America
(NYSE:BAC) is preparing to invest $3-5 million into MIT's Center for Future Banking over the next five years. The goal is to utilize a multidisciplinary approach ranging from behavioral economics to urban design in order to enhance the customer experience at the intersection of banking and technology. The new research center will be located at the Media Lab on MIT's campus.

The Next Billion
Mexican telecommunications provider Telmex International (NYSE:TII) partnered with MIT's Media Lab on the Next Billion Network. Over the next three years, an estimated one billion new consumers will become cell phone users. The goal of the Next Billion Network is to bring mobile technology to emerging and frontier markets. The network combines academic research, entrepreneurship and local relationship building to help shepherd the mobile technology proliferation.

Beyond Borders
Swiss automation technology provider ABB Ltd (NYSE:ABB) announced earlier this year a $5 million partnership with MIT's Energy Initiative. The goal is to support research of ABB technologies including nanofluids, power electronics and equipment heat management. ABB currently spends $1.1 billion a year on R&D. Its investment in MIT shows its commitment to look beyond geographic borders for creative input.

Tech Collaboration
(Nasdaq:MSFT) has also become a founding sponsor of the MIT Kerberos Consortium and will join its executive board. Kerberos is a networking protocol currently used in Microsoft products including Windows Vista and Windows Server 2008. The move allows Microsoft to work with Apple (Nasdaq:AAPL), Google (Nasdaq:GOOG) and Sun Microsystems (Nasdaq:JAVA) who already have seats on the executive board of the consortium. The groups' goal is to continue to develop and introduce interoperable technologies to improve computing interaction.

Final Thoughts
Universities like MIT are great breeding grounds for new ideas that have the potential to put companies at tops of their fields for ingenuity, design and functionality. Companies that are putting resources into researching tomorrow's best ideas are likely to gain an advantage over their competitors and make better investment opportunities for investors.

Investors take note: Companies that cut research and development are in danger of saving today but losing big tomorrow. Read Buying Into R&D to learn more.

Related Articles
  1. Investing

    The ABCs of Bond ETF Distributions

    How do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
  2. Stock Analysis

    3 Stocks that Are Top Bets for Retirement

    These three stocks are resilient, fundamentally sound and also pay generous dividends.
  3. Investing News

    Are Stocks Cheap Now? Nope. And Here's Why

    Are stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
  4. Investing News

    4 Value Stocks Worth Your Immediate Attention

    Here are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
  5. Investing News

    These 3 High-Quality Stocks Are Dividend Royalty

    Here are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
  6. Stock Analysis

    An Auto Stock Alternative to Ford and GM

    If you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
  7. Mutual Funds & ETFs

    The 4 Best Buy-and-Hold ETFs

    Explore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
  8. Investing

    How Aliko Dangote Became the Richest African

    An overview of how Aliko Dangote turned a local commodities trading business into a billion-dollar conglomerate.
  9. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  10. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!