Tech stocks will likely conclude the month relatively flat. Internet
shares, with losses of over 6%, followed by telecom gear and software issues,
with declines of over 2% each, lost the most ground. Bucking the trend,
semiconductor issues appreciated more than 9%, rebounding from a negative
January. So, will more of the same be in store for March? In the Internet
space, PriceWaterhouseCoopers noted that online advertising growth rates
slowed in the fourth quarter, although ad spending still showed a record 24%
increase in the period, versus 32% for the year. As for semiconductors,
Standard & Poor's cut Intel's 2005 chip sales growth estimates, citing a
slowdown in the PC market and in unit growth for mobile phone handsets, trends
that would also negatively impact the telecom gear and software industries.
So, what gives? Unless some decidedly bullish trend or event surfaces, more
backing-and-filling is likely, note some analysts. Steven Neimeth of the
SunAmerica Value Fund confesses to Dow Jones that bigger is better, that is,
he favors large cap stocks at the moment. "In an inflationary environment,
companies with better balance sheets and more stable growth profiles are
typically better positioned," he ex-plains. Also on the safe side, Brian
McMahon, of Thornburg Investment Management, tells the news service he is
"pretty much exclusively into dividend-paying companies ... [He seeks] an
interesting level of income today ... [and] a growing level of income in the
future. If the [stock] price rises, that's great too." Are all the risk takers
gone? Neither of these approaches is likely to favor tech stocks, often mid-
sized and non-dividend-paying companies, thus meaning the Nasdaq could be
range-bound for quite a while. Of course, one should not discount the role of
contrarians. Further, any major surprise on the economic front, including this
week's job report, could dislodge the tech-rich index from its rut.
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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