Telecom equipment stocks were among the biggest tech losers last week,
following a mixed result and outlook from Cisco Systems. This week, the
spotlight could be more focused on the chip sector, amid earnings releases
from the likes of Nvidia, Applied Materials and Photronics. Of note, Smith
Barney found that, as Cisco reported higher inventories quarter-on-quarter,
pressure on chip names exposed to enterprise networking is likely to ensue.
However, given Cisco's view of an improving macro outlook and the firm's
desire to build inventory through the fourth quarter of fiscal 2005, an
improving environment could be in sight for chipmakers, and thus, medium-term
investors should use any meaningful pullbacks as buying opportunities, said
Smith Barney. Also looking ahead, Google could see some extra activity this
week, as a key lockup period for insider shares will be lifted. Indeed, this
Monday, about 176.8 million shares of Google stock will be released from the
lockup, reported news services. Investors' view of what will happen is largely
mixed, even though overall, Wall Street reacted positively to Google's first
analyst day last week. Bear Stearns called the session "extremely positive,"
Jefferies found the event "upbeat" and Susquehanna Financial stated that its
"overall impressions were favorable." However, several analysts regretted that
the company did not provide details on financials and "did not shed light on
incrementals that had the potential to impact the stock price in either
direction," said Bear Stearns. They remain on their guard until they grow more
comfortable with the firm's ability to generate consistent growth. Susquehanna
is more bullish, saying the expiration of the lockup should improve liquidity
and, if short-term pressure ensues, create an attractive opportunity. Value
for Valentine, anyone?
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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