Looking ahead, the earnings flow in the tech sector will taper off this
week, and so far the third-quarter earnings season and fourth-quarter outlooks
appear lackluster. As of November 3, there has been 534 fourth-quarter
preannouncements for the broader market, with 151 being positive, 301 being
negative and the rest being in line, noted Lehman Brothers. "Analysts are
making more EPS downgrades than up-grades, as the S&P 500 revisions index has
slipped to a negative 6.6 from a positive 43.6 in June 2004," added the
broker. Anecdotal evidence suggests that tech companies represent a notable
portion of the negative outlooks, which have often focused on lower revenues.
Veteran money manager Tom Marsico explains to The Wall Street Journal that,
"There's a large overcapacity situation in the semiconductor industry and the
semiconductor capital-equipment industry. So I don't see those areas doing
well for some time." As for hardware, Lehman lowered its PC unit growth
outlooks for 2004 and 2005, in a bid to reflect "slower than anticipated
global economic growth, particularly the U.S. consumer." Nevertheless,
hardware has been doing well lately, often outpacing chips as tech leaders.
Dell, which reports earnings this Thursday, was actively sought last week.
Analysts' previews from the likes of Banc of America have been bullish, and
even hardware skeptic Lehman believes "Dell is poised to outperform the
broader tech market driven by sustained multi-year margin expansion." As to
the other tech report of note this week, Cisco Systems, the Street is also
enthusiastic. Smith Barney upgraded the stock last week on expectations of
solid results and "an incrementally more positive outlook," while CIBC World
Markets also anticipates a "more positive outlook for 2005." The latter broker
also cites Cisco's possible market share gains and valuation versus peers. In
sum, all is not gloom and doom in tech land.

    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 .

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