Friday September 10 3:18 AM ET
Merrill Issues Its Top 10 Technology Stock Picks
By Eric Auchard
NEW YORK (Reuters) - Merrill Lynch, the No. 1 U.S. brokerage, 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. (NYSE:IBM - news) 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 - news), the top supplier of Internet equipment, Intel Corp. (Nasdaq:INTC - news), the No. 1 computer chip maker, and IBM, the largest computer maker.
Motorola Inc. (NYSE:MOT - news), the leading U.S. wireless equipment maker, and Nortel Networks Corp. (NYSE:NT - news), the Canadian telecommunications giant, joined Texas Instruments Inc. (NYSE:TXN - news), a top maker of semiconductor communications chips.
Sun Microsystems Inc. (Nasdaq:SUNW - news), a leading maker of computers and software used to manage the Internet, and Oracle Corp. (Nasdaq:ORCL - news), 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 - news) and Novellus Systems Inc. (Nasdaq:NVLS - news) .
Noticeably absent from the list was Microsoft Corp. (Nasdaq:MSFT - news), 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 - news) and Compaq Computer Corp. (NYSE:CPQ - news), 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 - news), the top maker of large-scale data storage systems, Network Appliance Corp. (Nasdaq:NTAP - news), a maker of network data storage.
Also on the Merrill 15 list were Cablevision Systems Corp. (AMEX:CVC - news), the No. 6 U.S. cable television operator, CommScope Inc., a communications cable maker, and Echostar Communications Corp. (Nasdaq:DISH - news), the No. 2 U.S. provider of direct broadcast TV.
Retailers included Abercromie & Fitch Co., a youth clothing retailer, Best Buy Co. Inc., Circuit City Stores Inc. (NYSE:CC - news) and Tandy Corp. (NYSE:TAN - news), all top U.S. electronics retailers, luxury goods company Tiffany & Co. (NYSE:TIF - news) Inc. and Tricon Global Restaurants, owner of several popular fast-food restaurants. Rounding out the list was Providian Financial Corp. (NYSE:PVN - news), a consumer lender. |
