Tech stocks started the month with solid gains, despite a fresh batch of
earnings warnings. This week, tech bellwethers such as Sun Microsystems and
Apple Computer will be rolling out their latest results. The jury is out for
the third-quarter earnings season, but one thing is for sure, "Earnings are
the key. [If the results are] at or even slightly above expectations, the
earnings season could turn out to be a positive to get stocks moving through
the last quarter," explained Philadelphia Trust's Richard Sichel to The Wall
Street Journal. Also on the positive side, some analysts point out that
October can be an upbeat month for stocks, with traders already positioning
themselves for a Santa Claus rally. As to techs in particular, Ori Shachar, of
Driehaus Capital Management, tells CNNMoney he favors niche companies, since
"a recurring theme in tech has been competition. Most areas of tech are very
crowded and that puts a lot of pressure on margins." Meanwhile, CreditSights'
Arnie Berman tells the Internet news service that beaten down software and
chip stocks might perform better than this year's hot techs in the fourth
quarter since expectations are so much lower. Thus, even the slightest upside
surprise could lift some of these stocks. He adds, "At this point, boring
makes for an interesting fourth quarter. I think this year's losers win. The
stuff that people chucked from their portfolios is what they will want back."
However, semi stocks have already posted notable gains so far this month. In
addition, the tech sector's recent advance and investors' resilient optimism
in the face of warnings could indicate that Street 'whisper numbers' may be
much higher than official estimates. There is talk that, despite companies'
efforts to ratchet down analysts' expectations, Street estimates may not have
come down enough, and IROs may have to manage those expectations lower again
for the fourth quarter.
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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