Not to criticize or disagree but, merely to supplement and present a different view, I offer the following:
1- There is still lots of correcting to be done in the NAZ, IMO.
2-It is also very informative to look at longer term charts to get a true sense of what has occurred over three years, rather that just the last twelve months. For instance, if a stock is down 80-90% from its 1999 high, it may be thought of a cheap. Yet, when you look at its 1997-998 price it may still be up 100+%.
Sorry to pick on ORCL but this was a $5 stock less than two years ago. What makes it worth 500% more today? Is it that it is trading at 25 times book value? 13 times revenues? 32 times EBITDA? Is it the gamble that SOMEDAY it may actually earn enough to be worth $135 Billion ??
3- Capital spending reductions are the driver of this correction. they have brought reality to hallucinatory growth rate forecasts. There are many harsh lessons being taught right now that won't be easily or quickly forgotten. This leads to my third POV, i.e. that the recovery in this sector will NOT be V-shaped. Rather, it will be more saucer shaped that expected. The old highs for most of these names won't be seen again in this decade.
4-Earnings do matter. The ability to grow your business by losing ever greater amounts of money is not going to remain an acceptable business plan. The lesson is to look for quality and leave the search for the long shot to someone who truly KNOWS the intricacies of the technology arena.
5-Sensible consolidation of the many new technologies will take place. How many times can you upgrade and replace your IT needs in a short span of time? Is it cost effective?
6-There will be some very visible BKs before we come out the other side of the mountain. Northpoint just happened. RTHM will happen. COVD?? etc. etc.
7-I always ask the question: Has the story changed? When that's asked with respect to much of OSX and E&P land, the answer is still "NO", IMO. There is no visible, fundamental reason, to abandon the sector(s). Is it aggressively priced? Yes. Is it irrational? Of course not. It is merely priced on 12 months forward earnings (a word missing in many tech names)that are ramping up very quickly but with justification . |
