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Strategies & Market Trends : Guidance and Visibility

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Nov 5 3:59 PM EST

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To: SusieQ1065 who wrote (53054)	5/20/2002 8:36:52 PM
From: SusieQ1065	Read Replies (1) of 208838

Updated: 21-May-02 General Commentary Just in case last week's 8% rally left you dreaming of better days ahead, the Vice President, Merrill Lynch, and two high-profile corporate executives provided a reality check... The Vice President reminded Americans that the terrorist threat remains real and immediate; Merrill instructed investors to sell into tech strength citing lack of earnings visibility; Oracle's (ORCL) CFO said he expects customer spending to remain soft through 2002; and PeopleSoft's (PSFT) executive vice president for international ops noted that the company isn't seeing an increase in customer spending... The cumulative effect of the negative news was to stymie buying interest and trigger light profit-taking. While the VP's pronouncement was the most unsettling, the cautionary comments out of ORCL and PSFT went to the heart of the sector's near-term problem... If techs are to build on last week's impressive rebound, investors need to see more compelling and consistent evidence of an earnings recovery... Before earnings will turn around corporate investment must accelerate... Though anecdotal evidence suggests that Corporate America is growing more optimistic about the domestic economy (hence more ready to spend), there's very little hard or soft evidence to suggest a noticeable pick-up in IT (information tech) demand. As such, any rallies we see are largely faith-based... Unfortunately, recent evidence tells us that faith alone isn't enough to sustain an advance... And with earnings season all but over, there's not going to be much "hard" evidence to support the bullish case - at least not over the very near-term. Robert Walberg

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