Last week, as the peak of earnings season hit the market, investors
continued to monitor tech stocks from afar. "Clearly, investors, after seeing
such a big run in stocks from March through the end of June, are indecisive
right now ... My sense is that we can expect more choppiness as a result,"
said Jay Indovino, head of trading at Sungard Institutional Brokerage, to The
Wall Street Journal. Not that there wasn't plenty of tech fodder to pick
through. Within the chip industry, Texas Instruments and Novellus Systems
soared on their respective earnings releases and the promise of a better
future. Also aiding the chip sector, Lehman Brothers issued a bullish note on
the capital-equipment group. The brokerage also noted, "the longest and
deepest semiconductor equipment downturn in history is gradually ending."
That is great for semis, but potential trouble could be brewing elsewhere in
the sector. Out of the hardware space, Sun Microsystems plunged after seeing
a significant drop in its net income. Communication equipment issues were
balanced, as Lucent fell on a wider-than-expected loss, while Corning jumped
higher on its upbeat outlook for its third quarter. Software firm Computer
Associates surged, as it reversed last year's loss, and Electronic Data
Systems tumbled on a 56% decline in its quarterly income. Amidst the flurry
of earnings, last week's hesitant movement in tech stocks could be attributed
to companies' cagey attitude toward the second half. "Guidance remains
cautious and most companies are not willing to forecast a robust second half
yet," said Erik Gustafson, senior portfolio manager for Stein Roe & Farnham,
to the WSJ. As the end of earnings season approaches, and the typically
sleepy month of August draws closer, tech stocks could receive a taste of
their own medicine, as investors may leave them lingering until the fall.
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.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
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