Last week, tech shares ended flat to lower, with semi shares continuing to
trail the group. Yet, overall, the Nasdaq outpaced the other broad averages,
with Internet and telecom gear shares providing some support, thanks in part
to upbeat results and/or outlooks from Yahoo! and Nokia. While the rocketing
oil prices have mostly impacted "old economy stocks," as suggested by the
Dow's poor performance last week, meek guidance in the chip sector from the
likes of Novellus Systems suggests that the uncertainty over the energy price
outlook makes the consumer and corporations jittery about PC purchases. Given
the context, tech firms working on alternative energy sources may lure some
buyers in the near term. Further, some analysts may also be looking at sector
firms that pay dividends and/or have a strong cash flow, in a bid to hedge any
downside surprise. Microsoft, which is reporting this week, is among Jim
Wiess' favorites. Talking to Dow Jones, the manager of the Putnam Tax Smart
Equity Fund does not believe in criticisms that the software giant is turning
into a slow growth company, saying that its "actual growth rate is stronger
than most people are thinking ... The future earnings power of the [firm]
compared to today's stock price is an attractive investment." He is looking
for "companies that provide the best total return to shareholders. What we
find is that cash flow is a very important metric, and so it happens a lot of
the companies that we find to be attractive have strong cash flow and may not
have high dividends." Looking ahead, Microsoft will be joined this week by
Redback Networks, Broadcom, Motorola, Celestica and Texas Instruments, among
many others reporting their earnings results. Barring any major surprises on
that front, traders could still keep the sector range-bound, as the impact of
red-hot oil prices seems to be met with resilient mild optimism about the tech
sector, which had already sustained deep losses earlier in the year.
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
