Computer Indexes Rebound Back to Pre-Attack Levels (Update1)
2001-11-06 11:16 (New York)
Computer Indexes Rebound Back to Pre-Attack Levels (Update1)
(Updates share prices.)
New York, Nov. 6 (Bloomberg) -- Shares of some computer-
related companies, led by Oracle Corp., Cisco Systems Inc. and
Dell Computer Corp., have surpassed their prices before Sept. 11
on optimism that the industry will recover, investors said.
As of yesterday's close, the Nasdaq Computer Index had risen
11 percent since Sept. 10, the day before terrorists destroyed the
World Trade Center and damaged the Pentagon. The AMEX Computer
Technology Index increased 10 percent.
Computer-related shares have been lifted by positive sales
forecasts from some companies, including Oracle, and increased
demand for security products from companies such as Viisage
Technology Inc., a maker of face-recognition systems. They've also
benefited from the settlement of Microsoft Corp.'s federal
antitrust case and the Federal Reserve's interest rate cuts,
investors said.
``In the computer industry, we haven't had anything come out
worse (since the attacks). The earnings were all generally in
line,'' said Jerry Castellini, president of CastelArk Management
in Chicago, which has $1.3 billion in assets. ``You're at a steady
state right now.''
Until Sept. 10, The Nasdaq Computer Index had fallen 38
percent this year, hurt by the slowing economy and reduced
consumer and corporate demand for computer products. Sales of
personal computers fell in the second and third quarters and are
expected to have their first annual decline since 1985, according
to researcher IDC.
Attack Risk
``These stocks had been in horrific conditions,'' Castellini
said. ``We had already taken them down for 2001. The blow-off in
tech in September captured the expectations for a bad 2002.''
The worst may not be over if there's another terrorist
attack, said Castellini, whose firm still is selling computer
stocks.
U.S. markets closed on Sept. 11 and opened again on Sept. 17.
Both the Nasdaq Computer Index and the AMEX Computer Technology
Index reached their post-Sept. 11 low on Sept. 21.
``There was much panic selling after Sept. 11,'' said Tim
Ghriskey, who previously managed $4 billion in mutual funds and
other investments for Dreyfus Corp. and in July began his own
hedge firm, Ghriskey Capital Partners LLC. ``It's from panics like
that that market bottoms are made.''
Since then, investors have been buying, he said.
``Historically, during a recession, you buy the most
economically sensitive stocks because their earnings will recover
the fastest,'' Ghriskey said. ``There's been a buying frenzy of
computer stocks.''
Best Performers
The top performers in the Nasdaq Computer Index since Sept.
10 have included computer-based security companies such as
Viisage. Its shares soared as of yesterday's close more than six-
fold to $12.72 from $1.94, giving it the index's no. 1 ranking. In
late morning trading today, it fell 51 cents to $12.21. Cylink
Corp., which sells network security systems, has been the second-
best performer since the attacks with a more-than-fourfold gain.
It fell 3 cents today to $1.65. Visionics Corp., another maker of
face-recognition gear, rose to No. 5 on a four-fold increase.
Visionics fell 4 cents to $16.31.
Other companies have gained because of better-than-expected
quarterly results or positive forecasts. Shares of Oracle, the
third-largest software maker, had increased 31 percent. The
company has said it expects computer-related spending to recover
by the middle of 2002 because of the Federal Reserve's interest
rate cuts. Oracle fell 31 cents to $14.65.
Cisco Systems, the largest maker of gear to direct Web
traffic, had risen 24 percent. Yesterday, it reported revenue that
exceeded analysts' forecasts. Cisco shares today rose 50 cents to
$18.40.
Michael Dell, chief executive of Dell, the largest PC maker,
has maintained his forecast for a rebound in PC sales by the
second or third quarter of next year. Dell shares had risen 12
percent since Sept. 10. Dell shares today rose 6 cents to $25.36.
Some larger companies haven't recovered. Gateway Inc., the
second-largest direct seller of PCs, has fallen 15 percent on
concern U.S. consumers, its biggest market, will wait to buy PCs.
Gateway shares dropped 30 cents to $6.87.
Expectations
The indexes in mid-October climbed back above their pre-Sept.
10 levels and have stayed there. Microsoft Corp.'s settlement with
the U.S. government of its three-year antitrust case is bolstering
the indexes gains, because the biggest software maker is a large
component of both. Shares of Microsoft, the biggest software
maker, have climbed 9.9 percent since Sept. 10. Today, Microsoft
rose 22 cents to $63.49 today.
Investor sentiment also has been lifted by actions to help
the economy, such as interest-rate cuts and possible tax
reductions, said Ghriskey.
``With the amount of liquidity being pumped into the economy,
those corporate earnings will recover,'' said Ghriskey. ``It's
just a questions of when. Everyone's looking forward to that.'' |
