Monday, June 13, 2005 -- Tech shares trailed the broader market for most
of last week, as key mid-quarter updates from Texas Instruments and Intel
spurred investor jitters and profit-taking. Economic concerns also weighed and
may resurface again this week, amid a long list of data reports. Consumer
prices, industrial production, the Philly Fed survey and University of
Michigan sentiment index should be closely watched, and retail sales may
provide insight into the popularity of PCs and other electronics. Because of
strong sales of PCs and wireless handsets, the chip sector has enjoyed a
strong performance this year. The Semiconductor Industry Association recently
raised its global chip sales outlook for the year from flat sales to a 6%
increase. The SIA also notes that worrisome excess inventories were largely
worked off in the first quarter and were no longer a factor in the outlook.
Not everybody was convinced, however, and talking about Intel, First Albany
"continues to have concerns about an excess supply of microprocessors later
this year and early next year." In other trends, M&A activity remained febrile
last week in a variety of sectors and is expected to remain so for a while.
According to Thomson Financial, the value of announced M&A deals, which rose
more than 40% last year to $825 billion, is on track to break $1 trillion in
2005. The tech sector has not been immune to the phenomenon, especially among
maturing software companies that need new sources of revenue. While the M&A
fever of the late 1980s and 1990s had a strong market as a backdrop, and
therefore led to the use of stock as currency, this is not the case this year,
as the broad averages are flat to lower, and cash deals are more frequent.
Talking to BusinessWeek, Lehman Brothers predicts that the M&A market is so
strong that it may eventually bolster the stock market, as companies are
currently more willing to pay a premium to acquire assets in a competitive
situation.
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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