Merrill Forecasts Move From PCs To Simpler Devices
should we worry?
jhg
NEW YORK (Dow Jones)--Merrill Lynch & Co.'s technology analysts issued a report Thursday that forecasts an eventual move away from the personal computer as the industry's focal point.
The report, which summarizes a larger document being sent to clients,
lists 11 technology trends and 22 stocks that should benefit from them.
The firm said it sees a shift in the industry away from personal
computers as the driver of computer-hardware growth. In semiconductors, there will be a move from PC-centric chips toward those that power communications devices, according to the report.
Broadcom Corp. (BRCM) and PMC-Sierra Inc. (PMCS) are among the companies Merrill Lynch projects will benefit the most from this shift.
Further, according to the report, the next hardware category will be
appliances, "representing a shift from general-purpose to specialized
computing." Network Appliance Inc. (NTAP) and Sun Microsystems Inc.
(SUNW) are two companies that will benefit here, according to the
report.
Tough times in the chip equipment industry will likely result in
consolidation, especially given the low valuations of some of the
smallest companies in the sector. Brooks Automation Inc. (BRKS) is one
company likely to benefit from this trend, Merrill Lynch said.
Some of the industry's best-known names are missing from Merrill Lynch's list: Dell Computer Corp. (DELL) and Intel Corp. (INTC) are two notable absences. Steve Milunovich, the enterprise hardware analyst, said the firm is still bullish on some stocks that weren't included in the report, which focused on big-picture issues.
The Merrill Lynch report forecasts that data traffic will come close to exceeding the amount of voice information traveling across networks by 2003. The firm sees strong demand for telecom equipment for the next few
years and projects that mergers and acquisitions in the sector should
accelerate this fall. Stocks that could benefit include Cisco Systems
Inc. (CSCO) and Lucent Technologies Inc. (LU).
The firm said it is still enthusiastic about potential growth in the
Internet space, with growth likely in e-commerce and on-line health-care
companies. Internet-related companies mentioned in the report include
America Online Inc. (AOL), Microsoft Corp. (MSFT), Galileo International
Inc. (GLC), Sterling Commerce Inc. (SE), Cerner Corp. (CERN) and IDX
Systems Corp. (IDXC).
In enterprise software, the firm sees a shift toward programs that
enhance manufacturing and delivering goods and services. Two companies
likely to benefit here include i2 Technologies Inc. (ITWO) and Oracle
Corp. (ORCL), the report states.
The firm sees a transformation in the electronics equipment supply
chain, aiding Molex Inc. (MOLXA) and Solectron Corp. (SLR).
Merrill Lynch claims that services will become the "ultimate value-added segment" of the technology field. Companies likely to benefit include
Computer Sciences Corp. (CSC) and Ciber Inc. (CBR), the report said.
Merrill Lynch also sees consolidation in the mechanical design software
space, mentioning Structural Dynamics Research Corp. (SDRC) and Visio
Corp. (VSIO) as two likely winners.
- Christopher Grimes; 201-938-5253 |
