Recently, it's been hard for tech issues to catch a break, as investors
largely ignore solid corporate reports in favor of broader economic and
geopolitical issues. An indication of this trend was investors' reaction to
Cisco's strong quarterly report and upbeat revenue guidance, released last
week. Analysts instead concentrated on the firm's rising inventories, even
though Cisco attributed the rise to the need to meet expected demand. Dell's
solid first-quarter results and higher-than-expected current-quarter revenue
expectations were also overlooked. The firm slumped, as investors concentrated
on a rise in memory-chip prices in April, which restricted the firm's
quarterly profit gains. Further supporting the instance of investor pessimism
was Qualcomm's dismal performance, after it raised its third-quarter and 2004
forecasts, partly due to stronger orders. Jim Paulsen, chief investment
strategist for Wells Capital Management, said to FT.com, "The over-optimism on
tech in the late 1990s may be giving way to over-pessimism now." Still, tech
stocks are not being singled out, as many other mitigating factors refuse to
stop stalking the broader market. At one point last week, stocks fell to their
lowest levels of the year, with the Dow falling below the psychologically
important 10,000 level. Rick Meckler, president of LibertyView Capital
Management, said in a Reuters' news piece, "There's been a lot of downward
pressure on the market from a confluence of interest rate fears combined with
some awful news out of Iraq and the continued rise in oil prices." Oil prices
surged above $41 a barrel, spurring concerns the rise could limit corporate
profits and consumer spending. This week, as financial reports are released
from Hewlett-Packard and Applied Materials, it will be up to investors to
decide whether the glass is half empty or half full.
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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