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

To: Lizzie Tudor who wrote (63990)	5/12/2003 12:59:23 PM
From: JakeStraw	Read Replies (1) \| Respond to of 77400

>>Everything is as it was before, pre-bubble. Huh!?? You better hope not!!

To: Lizzie Tudor who wrote (63990)	5/12/2003 1:02:46 PM
From: hueyone	Read Replies (1) \| Respond to of 77400

Certainly not the pros who are obviously buying tech stocks now. I suspect the pros are just momentum investing and swing trading---nothing to do with the fundamental value of the companies imho. Regards, Huey

To: Lizzie Tudor who wrote (63990)	5/13/2003 1:11:11 AM
From: elmatador	Respond to of 77400

Tech revival may be fleeting By Richard Waters in San Francisco Published: May 12 2003 17:35 \| Last Updated: May 12 2003 17:35 << Too much networking gear was dumped in the market with the scam called Y2K. It will take a while for new to need replacement.>> Predicting the revival of corporate spending on information technology has been a mug's game over the past three years. But that doesn't stop investors trying. A seven-month rally has turned tech into the best-performing corner of Wall Street. So far this year, the tech sector has risen by around 17 per cent, compared to a 6 per cent advance in the Standard & Poor's 500. That rally may well be running out of steam. The faithful have bid tech stocks up to a level where they are trading at a substantial premium to other US stocks: but there is still little evidence of any return to growth in the moribund IT industry. The price/earnings multiple of the tech sector now stands at an 80 per cent premium to the S&P 500. Though well below its boom-time highs, that is still around double the average valuation premium of the past decade, according to Merrill Lynch. Yet there seems little reason to expect the sort of bounce in corporate spending on information technology that might justify this run-up. First, the reasons to be cheerful. Tech executives have learnt how to sound more somber about the prospects for their industry. Last week it was the turn of John Chambers, chief executive of Cisco Systems, who issued another cautious outlook for the leading maker of networking equipment. Cisco, which was caught out early on by the extent of the collapse in spending, has been humming along just fine in recent quarters, squeezing costs and churning out cash. But Mr Chambers, like other tech executives, has been careful not to over-promise when it comes to revenues, instead setting more conservative targets. Hewlett-Packard's latest quarter earnings due next week are likely to continue this picture. HP's revenues have generally lagged since it completed its takeover of Compaq Computer a year ago. Yet it has eaten deeper into its cost base than it predicted at the time of the deal, and earnings have been better than expected. This more downbeat approach, with noone stepping up to predict a rebound in revenues, has meant that tech companies no longer produce earnings disappointments each quarter. Instead, their earnings for the first quarter of this year actually topped expectations. Thanks largely to cost-cutting and the falling dollar, nearly three-quarters of tech companies beat earnings expectations in the first quarter. History suggests that once the earnings disappointments are over, the stage is set for an eventual profits recovery. Additionally, there have been indications that the three-year slide in tech spending may be coming to an end. Recent commerce department reports suggest that shipments of equipment are at least not falling. This is hardly enough to support the sort of rally that has driven tech stocks since last October, however. Earnings for the tech sector may have risen in the first quarter, but revenues edged down slightly from a year before. Now, any hopes of a post-war bounce in capital spending seem to be fading fast. Goldman Sachs delivered the most up-to-date news of IT buyers' intentions with a survey last week that suggested companies now expect to cut their spending this year by around 3 per cent, compared to an earlier expectation that spending would edge up by 1 per cent. International Business Machines, the industry bellwether, will offer its own verdict on the state of the market at an analyst meeting this Wednesday: while Big Blue is doing better than many and is gaining share in its core markets, few expect it to predict a resurgence of growth in the second half of this year. Yet most Wall Street forecasts for individual tech stocks still anticipate a second-half revival, with revenues climbing 6 per cent from a year before. Nor has the wider corporate world recovered the sort of financial stability that normally precedes a return to investment in new plant and equipment. "I don't believe corporate profits are yet at a level that would support capital spending," says Steve Milunovich, tech strategist at Merrill Lynch. Overall tech spending, he adds, "could get worse before it gets better."