Technology shares ended mostly higher for the month of September, with
Internet, computer and software issues posting the biggest gains, and semi
shares trailing the sector. Yet, the quarter was largely negative for techs,
with semi, Internet and telecom gear shares losing the most in the period.
Computer and software shares suffered the least. Recently, traders repeatedly
indulged in chips, saying that profit warnings in the sector were just a sign
of a healthy slowdown. CNNMoney commented that, according to industry
researchers, inventory levels, which began building in the second quarter, are
already starting to decline, as in contrast to previous cycles, companies have
reacted faster to reduce them. Also talking to the Internet news service,
Jefferies' Arthur Ho-gan added that, "If you were out to find a bargain, then
semiconductors are certainly ripe for that." The proliferation of lower
outlooks, nevertheless, took its toll on the sector in the third quarter.
Meanwhile, a lack of negative preannouncements and fresh M&A deals or
speculation helped the software and Internet sectors last month. Talk that
Internet advertising is still a nascent growth story, as well as comments that
Internet auction sites have become a staple with little vulnerability to macro
cycles have also cast an alluring light on Internet stocks in general. So,
will these trends hold at the dawn of the third-quarter earnings season? The
pessi-mists will note that semis are already in a bear market, having lost
nearly 30% since the beginning of the year. The bulls will likely explain
that a broad slowdown had been expected in the second half anyway, and that
even though, ac-cording to The Wall Street Journal, techs are ex-pected to see
the biggest drop in third-quarter profits compared with the other industries,
a still healthy growth rate of 236% is seen for the sector, compared with 313%
in the second period.
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
back to top
