Article: "8 Tech Stocks Which Could Rock the Market"
individualinvestor.com
Staff Writer: Craig Schneider (4/10/00)
So, it?s onward and upward for tech stocks again, right? Not so fast.
Although the tech and Internet stocks that seemed in a freefall last Tuesday
enjoyed a solid turnaround during the latter part of the week, fund
managers are anxiously awaiting the first quarter earnings reporting
season, which officially gets underway this week.
For they know that one missed target, one disappointing revenue number
or one warning about future quarters could not only send the company in
question into a freefall. It could spook the rest of the market and send the
tech stocks in general into yet another frightening fall.
Why? Because stock prices and valuations are very high and many
investors have been wary for awhile that perhaps these companies don?t
warrant such optimism. 'The problem is that the valuations are so high even
today,' adds George Gilbert, co-manager of the Northern Technology fund
(NASDAQ: NTCHX - Quotes, News, Boards). 'The growth and the
fundamentals are great, but are they worth what you're paying?'
And keep in mind that managers and analysts are very optimistic going
into the earnings reporting season. ?Negative pre-announcements are
running about normal, maybe slightly below normal,? says Gilbert. ?From
what we can see, earnings are going to be fine. Revenue is going to be
fine.?
This bullishness underscores the vulnerability of the markets should a major
tech company miss its earnings estimate or simply meet it but miss the
so-called whisper number.
Not all companies hold this kind of sway and power over the markets. And
keep in mind that the converse is true as well: One blow away earnings
report could catapult the entire tech market.
In any case, Brooks Dougherty, lead portfolio manager of the Scudder
Technology fund (NASDAQ: SCUTX - Quotes, News, Boards) notes:
?April (historically) will be a big month for a little more rationalization, where
you get a new set of numbers and you start peeling through those. And
that?s where more people make hard decisions,? he says. ?I believe the
bias in the news flow in the next 30 to 45 days is going to be very positive.
At some point people will say ?Okay, enough is enough, I?ve got to own
companies that have the mojo.??
Indeed, analysts typically ratchet up their estimates if the quarter is solid
and/or management gives bullish guidance, which in turn creates a more
compelling investment for these high-flying tech prices.
So, which companies have the potential to rock the market, both upward
and downward? Many pros say watch closely these eight companies:
[snip MOT, NXTL]
individualinvestor.com
[snip QCOM]
Sun Microsystems (NASDAQ: SUNW - Quotes, News, Boards) is
expected to post earnings of $0.23 per share on April 13, according to
I/B/E/S. As a leading provider of networking servers, Sun has met or
beaten estimates in each of its last six quarters. As we noted in our last
Magic 25 update management sounded confident of published estimates
and said that the business activity looked great across all segments.
In fact, Friday afternoon Bear Stearns said there is potential upside to
Sun?s quarterly results, thanks to strong server sales. The brokerage said
that it could see sales growth of 25% or better. It is looking for earnings to
come in at $0.21 per share, below the consensus.
Meanwhile, Sun?s business is slowing in Japan due to the slightly weaker
local currency. But, since Japan represents 10% of Sun?s business, we
don?t believe that this will materially affect earnings.
[snip to end--2 1/2 more pages]
individualinvestor.com
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