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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (49369)	4/2/2002 4:47:14 PM
From: stockman_scott	Respond to of 65232

Tech stock investors need to be cautious By Andrew Leckey The Chicago Tribune Published April 2, 2002 <<...Technology can never be considered a dead issue because everyone knows our modern world is constantly evolving with new gadgets and services designed to make work and life more efficient and enjoyable. Yet because hard-hearted technology jilted scores of investors during their last whirlwind romance, most of these people now want no part of it. It will have to become devastatingly attractive for them to respond to its come-hither look. In 2002, there have been moments of stock market euphoria over tech's glowing prospects. But these are followed by sell-offs whenever negative earnings possibilities surface. This group's vulnerability to the business cycle can have chilling consequences. The bankruptcy of former telecommunications favorite Global Crossing Ltd. and government inquiries into its accounting practices casts a long shadow over all technology. Investors who decide to sign on to tech's dance card should do so with caution and only for a dedicated portion of their portfolios. They must have realistic expectations, understand what a given company actually does and consider earnings prospects along with the usual pie-in-the-sky hype. Technology stocks as a group are trading at around 50 times this year's expected earnings, rather pricey in light of the unsure near term. "Since information technology spending tends to lag in a recovery, we're looking at late this year or early next year before things really improve materially," predicted Art Russell, senior technology analyst with Edward Jones in St. Louis. "The first to see a pick-up in demand would be the semiconductor companies and component vendors." Lagging behind will be companies making the expensive enterprise software used by large corporations, he believes. The last segment to improve will be communications equipment companies such as Cisco Systems, Lucent Technologies and Nortel Networks. Russell considers the best bargains for investors to be the stocks of software maker Oracle Corp. (ORCL) and computer-networking firm Sun Microsystems Inc. (SUN). They'll fare well in an economic revival. "The funny thing is, even though the Nasdaq is down 60 percent over the past two years and 14 of the 20 worst industries were tech industries, prices of these companies in relation to their earnings are still very high," observed Sam Stovall, senior investment strategist with Standard & Poor's in New York. "Investors are factoring in a nice economic turnaround, but it has to be right on target for these high valuations to be justified."...>>