Last week, tech stocks, along with the broader market, continued to be at
the mercy of geopolitical events and rising oil prices. At the start of the
week, Iraq suffered a serious setback, after the current head of the Iraqi
Governing Council was killed by a car bomb in Baghdad. Elsewhere, India's
benchmark stock index tumbled, as investors were concerned the new Congress
Party government could curtail the privatization of state-run firms. Also,
crude oil prices hit an all-time high above the $41-a-barrel mark. Still,
communications equipment issues did not do the tech sector any favors. Lucent
tanked, after the SEC charged 10 individuals for their alleged roles in
certain faulty accounting practices at the firm. LU also agreed to a $25
million fine. Nortel slumped, after it provided top executives with hefty cash
bonuses, as opposed to the usual award of stock, just weeks before the stock
tumbled on an earnings restatement warning. Ciena's quarterly results
disappointed the Street, while Tellabs slumped, following its pledge to
purchase Advanced Fibre Communications. Meanwhile, some heavy tech hitters did
manage to provide market relief, albeit briefly. Hewlett-Packard and Applied
Materials posted stronger quarterly results, while investors applauded IBM's
belief its rate of growth will outpace its rivals. But the rally was short-
lived, as those pesky oil prices continued their ascent, leaving some
investors to wonder if stocks are moved by solid corporate reports or rather a
dearth of negative geopolitical news or oil moves. Ned Riley, chief investment
strategist at State Street Global Advisors, said to Reuters News, "Ironically,
the basic turn in the market has been really a slight diminishment in the
negative overtones, whether it's oil, inflation, interest rates or the
geopolitical situation. I truly believe we have reached the extremes as to
what damage these factors will cause." Let's hope so!
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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