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Tickers in this Article: MSFT, QCOM, TXN, HPQ, IBM
The technology sector is supposed to be cyclical. It isn't, though ... at least not for a great number of its stocks. You can add that assumption to the list of misguided assumptions that are steering investors wrong.

In fact, five very well-known tech names are now generating record-breaking profits despite the lamentations - sometimes their own - that an economic slowdown would crimp margins. (For more on tech stocks, check out A Primer On Investing In The Tech Industry.)

TUTORIAL: Earnings Quality

Never Better
Though Texas Instruments (NYSE:TXN) slumped a little last quarter, over the last 12 months the company has earned $2.66 per share ... its best 12-month stretch ever. To be fair, the two recessions did prove to be a drag on earnings, but each time the company came out stronger than before. Like a lot of other technology companies, Texas Instruments makes semiconductors. It's got an amazing amount of product diversity, though, and focuses on the 'basics' rather than the 'cutting edge'. The strategy has clearly worked.

For anyone who assumed the introduction of free online (web-based) office productivity software, or freeware like OpenOffice, would kill Microsoft (Nasdaq:MSFT), you may want to reconsider. The cumulative earnings of $2.52 per share for the software giant over the past four quarters is a record-breaking profit level.

Since 2007, critics of Qualcomm (Nasdaq:QCOM) haven't been hard to find. They've been quick to point out that new, better and more functional products are just going to drive a nail in Qualcomm's coffin. Guess not - Qualcomm's net profit of $2.30 per share over the last year is its best annualized bottom line ever.

It's difficult to say how much of Hewlett-Packard's (NYSE:HPQ) earnings growth came from synergies achieved - and the sheer top line boost - after the Compaq acquisition, though at this point it doesn't matter. While it's never been red-hot growth, earnings have at least reliably increased since 2005; the 2008 recession didn't seem to hurt that much. The PC maker has earned a record $4.08 per share over the past 12 months, calling into question the expected death of the PC genre.

Finally, good old Big Blue still doesn't disappoint. International Business Machines (NYSE:IBM) has posted per-share net income of $11.92 over the past four quarters ... the best four-quarter stretch ever for the company. In fact, IBM is a poster child for consistency. Since 2005, it's never had a weaker year-over-year comparison of quarterly results. That's a testament to the completeness of its product (hardware, software and consulting) that ultimately builds a recurring revenue machine. (To learn more about earnings and their effect on stocks, read Earnings Power Drives Stocks.)

Turning Technology Into Consumer Staples
While the last 10-year period has been deemed the "lost decade" by investors because the major market index levels are back where they were in mid-2001, it's not like you can blame it on these five companies. More important, though, the proven ability to turn a technology into a consumer staple is what makes these tech names such great picks for the next 10 years.

The Bottom Line
What's interesting about this group is that, with the exception of IBM, none of these stocks are anywhere near all-time highs - even though earnings are. Had it only been one or two quarters of strong bottom-line growth, hesitation would be understandable. But these companies have posted a multi-year string of proven earnings growth. There's little left to doubt. (To help you determine if these earnings and stocks should be added to your porftolio, see Earnings: Quality Means Everything.)

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