- Merrill Lynch, the No. 1 U.S. brokerage, on Thursday named its 10 top technology stock picks,
shunning volatile Internet stocks in favor of big suppliers of underlying software and hardware products and services.
In a conference call with investors late Thursday
afternoon, Merrill analysts reeled off a list of traditional
blue chip technology stocks including Big Blue itself, the
International Business Machines Corp. The list was weighted
toward makers of big computer systems, communications and
semiconductor chips.
"We do feel most of these names do you give you Internet
exposure but mostly through the infrastructure," Merrill
Lynch's chief technology analyst Steve Milunovich said during a
conference call with investors.
"When clients want technology exposure, we think these are
our best 10 ideas," he said, noting the list is composed of
top-rated stocks with at least a $1 billion market
capitalization.
Traders and analysts said Merrill's list helped propel
technology stocks higher, led by IBM, whose shares leaped $4 to
$134-3/4, the best single-day move for the stock since July.
IBM also benefited from upbeat comments by other Wall Street
analysts about its computer services and storage businesses.
Milunovich said Merrill semiconductor analysts see the
recent turnaround in the boom-or-bust computer chip business
as continuing to gain momentum.
He named Cisco Systems Inc. (NASDAQ: CSCO), the top supplier of
Internet equipment, Intel Corp. (NASDAQ: INTC), the No. 1 computer
chip maker, and IBM (NYSE: IBM), the largest computer maker.
Motorola Inc. (NYSE: MOT), the leading U.S. wireless equipment
maker, and Nortel Networks Corp. , the Canadian
telecommunications giant, joined Texas Instruments Inc.
(NYSE: TXN), a top maker of semiconductor communications chips.
Sun Microsystems Inc. (NASDAQ: SUNW), a leading maker of
computers and software used to manage the Internet, and Oracle
Corp. (NASDAQ: ORCL), the leading database software maker, were
included on the list.
Also named as top technology picks were two leading
suppliers of the equipment used to make computer chips,
including segment bellwether Applied Materials Inc. (NASDAQ: AMAT)
and Novellus Systems Inc. (NASDAQ: NVLS).
Noticeably absent from the list was Microsoft Corp.
(NASDAQ: MSFT), the world's largest software company, which awaits a
ruling in the U.S. government antitrust trial against it and is
fumbling to develop a coherent Internet strategy.
Also left off were top personal computer makers like Dell
Computer Corp. (NASDAQ: DELL) and Compaq Computer Corp. (NYSE: CPQ),
which have had trouble sustaining historic rates of growth.
Cisco rose $1 to close at $69-15/16. Applied Materials
gained $2-3/8 to $79. Both trade on Nasdaq. Motorola added
$1-1/8 to $98-11/16 on the NYSE. Nortel added C$3.60 to close
at C$69.35 on the Toronto exchange.
Novellus added a 1/4 point to $66-3/8 in Nasdaq trade,
while Texas Instruments was up the same fraction to $89-1/8 on
the NYSE.
Sun Micro lost $1-1/4 to $84-3/16 while Oracle gave back
1/4 of a point to close at $44-1/16, both on Nasdaq.
Milunovich said the list, with a six- to 12-month time
horizon, is designed for selective buyers looking to add a
technology stock to their core holdings and investors looking
to own an entire portfolio of high-growth stocks.
Also on the call, Steve Narker, senior director of equity
markets, named the brokerage's "favored 15 list" of stocks,
which included many of the top 10 tech picks, supplemented
mostly by what might be grouped as retail "lifestyle" stocks.
Technology favorites included IBM, Oracle and Texas
Instruments, along with EMC Corp. (NYSE: EMC), the top maker of
large-scale data storage systems, Network Appliance Corp.
(NASDAQ: NTAP), a maker of network data storage.
Also on the Merrill 15 list were Cablevision Systems Corp.
(AMEX: CVC), the No. 6 U.S. cable television operator, CommScope
Inc. (NYSE: CTV), a communications cable maker, and Echostar
Communications Corp. (NASDAQ: DISH), the No. 2 U.S. provider of
direct broadcast TV.
Retailers included Abercromie & Fitch Co. (NYSE: ANF), a youth
clothing retailer, Best Buy Co. Inc. (NYSE: BBY), Circuit City
Stores Inc. (NYSE: CC) and Tandy Corp. (NYSE: TAN), all top U.S.
electronics retailers, luxury goods company Tiffany & Co. Inc.
(NYSE: TIF) and Tricon Global Restaurants (NYSE: YUM), owner of several
popular fast-food restaurants. Rounding out the list was
Providian Financial Corp. (NYSE: PVN), a consumer lender. |
