Monday, December 6, 2004
Wall Street appears to be divided over the technology sector's outlook.
Aside from mixed guidance from key industry players in the past month, a
variety of data reports and analyst and CEO comments are painting a mixed
picture. Last week, an industry group reported that global chip equipment
sales are expected to dip about 5.2% in 2005 following strong gains this year.
Also, while the third-quarter GDP was revised higher, surprising Wall Street,
the report also showed that third-quarter profit growth was only up 8.1% year
on year, well below the 18.5% recorded in the second quarter and the 32.1% in
the first period. On the bright side, Intel offered a pleasing outlook last
week. Also, Hewlett-Packard's CEO Carly Fiorina told the Wall Street Journal
she remains optimistic, while also anticipating a slowdown. She expects "the
tech industry is going to grow at two times [GDP] growth. It was five times
GDP growth ... in the 1990s, and that was unsustainable. Now we've entered a
period where tech is fundamental. When something becomes fundamental, it
involves a more important and complex set of decisions, so growth slows. By
the way, two times GDP is an OK growth industry." So where will the growth
come from? Bryn Mawr Trust Wealth Management's Eric Thorne tells Dow Jones he
is upbeat about consumer spending on electronics, and thus likes tech firms
that make parts going to cell phones, flat screen TVs and other electronics.
Also on the bright side, retailer Amazon.com stated last week that consumer
electronics became its biggest sales category for the first time in the
Thanksgiving weekend, while Consumer Electronics Daily editor Mark Seavy told
Smith Barney that consumer electronics were likely "one of the best selling
categories" in the period. Further, some pundits observe that consumers
increasingly wait until the last days ahead of Christmas to make their
purchases. Thus, additional treats may be forthcoming for the selective tech
investor.
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
