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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Curtis E. Bemis who wrote (28722)	10/15/1999 4:48:00 PM
From: Zoltan!	Read Replies (1) \| Respond to of 77400

His fondness for equipment makers does not extend, however, to the two biggest names in telecommunications gear, Nortel Networks Corp. (NT) and Lucent Technologies Inc. (LU). Both those companies have pricey stocks and too big a piece of older technologies for his liking. "You can replicate the sexy part of Lucent without owning Lucent," he said. The same goes for Nortel, he said. Dow Jones Newswires -- October 15, 1999 DJ TIP SHEET: Federated's Grefenstette Likes Tech, Telecom By Shawn Young NEW YORK (Dow Jones)--Federated Investors Inc. (FII) vice president and senior portfolio manager James E. Grefenstette likes telecommunications companies, especially equipment makers, so much that he is co-managing a brand new fund devoted to them. The firm started the Federated Communications Technology Fund last month as a pure play in what Grefenstette and co-manager Trent Nevills believe is the market's hottest sector. Grefenstette's fondness for telecommunications and technology stocks is also apparent in his holdings in two other funds he co-manages with Salvatore A. Esposito, the Federated Large Cap Growth Fund and the mid-cap Federated Growth Strategies Fund. "People look at how much we've spent on technology in the last decade and think it's got to slow down, but it's just beginning," Grefenstette said. Between the three funds, all of which favor technology, Grefenstette's holdings range from marquee names like Cisco Systems Inc. (CSCO), Microsoft Corp. (MSFT) and MCI WorldCom Inc. (WCOM) to smaller companies like F5 Networks Inc. (FFIV) and RF Micro Devices Inc. (RFMD). The Class A shares of the Large Cap Fund are up 18.4% so far this year and Class A shares of the Growth Strategies Fund are up 20.3%, compared with 7.9% as of Wednesday for their benchmark S&P 500 Index. Grefenstette thinks year 2000 concerns could work in favor of the biggest companies in the coming months. The more nervous investors get about sales slumps and technical glitches, the more conservative they are likely to be, he said. "You tend to favor stability of earnings and liquidity," Grefenstette said. Once Y2K is out of the way, though, focus will return to the defining trends in technology, said Grefenstette, who thinks the bull market will hold on. "I think there's going to be an awful lot of talk about the continued build out of the Internet, the intranet and everything that goes with it," he said. It's everything that goes into the Internet and related technologies that really appeals to him. "We like the picks and shovels," he said. The new fund includes such consumer mainstays as America Online Inc. (AOL) and Yahoo! Inc. (YHOO), but "it's not a dot-com fund." His fondness for equipment makers does not extend, however, to the two biggest names in telecommunications gear, Nortel Networks Corp. (NT) and Lucent Technologies Inc. (LU). Both those companies have pricey stocks and too big a piece of older technologies for his liking. "You can replicate the sexy part of Lucent without owning Lucent," he said. The same goes for Nortel, he said. Along similar lines, the Baby Bell local phone giants don't appeal to him because of the competition they face from upstart competitors armed with the latest technologies. "The Bells just are getting their lunch eaten," Grefenstette said. Big banks and financial services companies could face similar fates, he said, as the Internet suddenly allows customers to comparison shop on an unprecedented scale. While he holds MCI WorldCom, which has the largest share of the Internet backbone, he is taking a wait-and-see approach to AT&T Corp. (T). "They have the legacy of not being able to get ahead of the curve," Grefenstette said." It's a real show-me stock for growth investors." His fondness for up-and-coming technologies has made him an investor in wireless phone carriers Nextel Communications Inc. (NXTL) and Sprint PCS Group (PCS). "It's tough to be uncompelled by the growth rates we're seeing," Grefenstette said. As a growth investor, he said he tends to shy away from heavy industry, transports and cyclicals along with Gillette Co. (G) and Coca Cola Co. (KO), where he doesn't see the growth he is looking for. In health care, he favors medical devices and biotech over pharmaceuticals, where he is troubled by patent expirations and a shortage of new blockbuster drugs. interactive.wsj.com