Pretty nice report from S&P, except for the inadvertant omission of MRVC. I'm sure they'll get it right next time.
Industry Spotlight
Computers (Networking)
The long-term outlook for the companies in the computer networking industry is positive. Year to date through September 17, the S&P Computers
(Networking) Index rose 21.4%, versus a 12.5% gain in the S&P 1500. The growth in sales of networking products (hubs, routers, switches and
network adaptor cards), continues to outpace that of the overall computer industry. Most leading industry research firms estimate that the market for
these products is growing some 30% to 50% a year. As a result, companies that have positioned themselves to compete successfully in this segment
continue to have attractive long-term outlooks.
The growth in the use of networking hardware stems from the proliferation of fast and inexpensive desktop computers and the trend toward linking
these systems into local and wide area networks called LANs and WANs, respectively. Unfortunately, as more users have been added to existing
networks (and have placed ever-increasing demands on them), the performance of the network has been degrading steadily. This reflects the
limitations of existing networks, where available network capacity is shared by users. As more users are added to a network, competition for
bandwidth increases and performance suffers. This situation is expected to worsen as bandwidth-hungry client/server applications, such as video
conferencing, become more prevalent. In addition, networks are extending to the home and across state and country lines, as today's worker
increasingly needs to be connected to critical information 24 hours a day, seven days a week.
Corporate America is responding to the changing networking paradigm and resultant bottlenecks in a number of ways. First, they are breaking up their
existing networks into smaller groups, which helps free up bandwidth for existing users. This means strong demand for hubs, which provide a common
connection point for users on a network, and for routers, which connect disparate networks that use different communication protocols. Second,
where large bandwidth is needed by users on a regular basis, switching technology is being employed. Switch products dedicate a fixed amount of
bandwidth to individual clients or PCs on the network. Longer term solutions are expected to include the migration to higher speed technologies, like
ATM or Fast Ethernet, which will fuel demand for new networking hardware.
Selected STARS Recommendations
Company
STARS
3Com Corp.
Order Stock Report for COMS
5
Bay Networks
Order Stock Report for BAY
5
Cabletron Systems
Order Stock Report for CS
4
Cisco Systems
Order Stock Report for CSCO
4
STARS stands for Standard & Poor's ST ock Appreciation Ranking System.
5=Buy; 4=Accumulate; 3=Hold; 2=Avoid; 1=Sell. |
