Louis Rukeyser's Wall Street (8:30 PM ET) - CNBC News Transcripts
December 20, 2002 Friday
ANCHOR: LOUIS RUKEYSER
<<...RUKEYSER: Roger McNamee has been called the consummate Silicon Valley insider. So tell me, Roger, what's going on inside Silicon Valley?
Mr. ROGER McNAMEE (Integral Capital Partners Co-founder and Managing Director): Well, things are still bleaker in Silicon Valley than I think they are in America as a whole. But I think the valley is poised for a much better 2003. The good news, Lou, is that in the course of 2002, everyone in Silicon Valley went from viewing this recent downturn as just a little blip to recognizing that it is--is a new reality, that they need to be more conservative, they need their cost structure to be in line. As a result, as the environment improves over 2003, I think we're going to see tremendous earnings leverage in these companies, and with that, I think very good stock performance, at least relative to recent history.
RUKEYSER: You have warned us for a long time that you couldn't just buy the group.
Mr. McNAMEE: Oh, absolutely.
RUKEYSER: So...
Mr. McNAMEE: I think stock picking is everything in technology. And I would encourage our viewers to look at technology as a place where the average company will still suffer for the next couple of years, but there are going to be some great stories. We happen in the consumer area to like two names in particular: Overture, which is the leading Internet search engine for online commerce, and they've profited enormously from the purchases on the Internet; and Concord EFS, which is the leading transaction processor for--for debit cards. We also think, though, that...
RUKEYSER: Those are the two largest holdings of your firm.
Mr. McNAMEE: They are, indeed, our largest holdings, and--and we really believe that the consumer area remains surprisingly strong, and will do so into next year. We're more confident on the consumer than, I think, is maybe the consensus. But oddly enough, we even think next year we'll start to see some recovery on the enterprise side of technology, and there I would encourage people to look at the larger capitalization companies. Two that we happen to like are Siebel Systems, which is the leading vendor of software for customer relationship management, and also Cisco Systems, the leading vendor of--of networking equipment. Those are both stocks that have huge amounts of cash and where I think the opportunity to outperform the market exists, which I don't think is true for the average tech stock.
RUKEYSER: Will Cisco ever see 70 again?
Mr. McNAMEE: Well, you know, I'd like to think that it would, Lou, but I will tell you, I don't think any of our viewers should buy the stock with that as their price target. It's certainly not mine.
RUKEYSER: Again, these are holdings in your funds?
Mr. McNAMEE: Indeed. They are all in our fund and among our largest holdings because those are the stocks we believe in...>>
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