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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (11334)	9/1/2003 12:02:23 AM
From: StanX Long	Read Replies (4) \| Respond to of 95880

Tech Gains Leave Money Managers Fearing New Bubble Sat Aug 30, 9:09 AM ET story.news.yahoo.com By Nick Olivari NEW YORK (Reuters) - Technology stocks' big gains since last October have left many money managers fearful that the bubble of the late 1990s may be floating around the market again. The bubble prompted retail investors to pile into anything remotely related to tech -- debt-laden telecoms, fly-by-night Internet sites and software companies investors had never heard of before. The result: all saw their stocks soar to frightening levels. When the frenzy collapsed, it heralded the worst bear market in six decades. Though no one is expecting a market collapse now, investors are concerned that much of the current tech buying is based on momentum rather than the outlook for the company. "What's leading the market are companies that have no earnings and no dividends," said Jonathan Golub, vice president and U.S. equity strategist with JPMorgan Fleming Asset Management, which oversees $400 billion in assets. Golub notes that while stocks like Microsoft Corp. (Nasdaq:MSFT - news), up 21 percent in the last 11 months; Cisco Systems Inc. (Nasdaq:CSCO - news), up 109 percent; Intel Corp. (Nasdaq:INTC - news), up 108 percent; and International Business Machines (NYSE:IBM - news), up 49 percent, have posted solid gains, other companies with possibly less potential are up much more. MEANINGFUL DISPARITY "There is a meaningful disparity between the well established companies and the rest," Golub said. Electronics contract manufacturer Sanmina-SCI Corp. (Nasdaq:SANM - news) is up 433 percent and telecommunications equipment makers Lucent Technologies Inc. (NYSE:LU - news) and Nortel Networks Corp. (NYSE:NT - news) have jumped 214 percent and 600 percent, respectively. The world's largest maker of fiber-optic cable, Corning Inc. (NYSE:GLW - news), has gained 634 percent, while communications equipment maker Avaya Inc. (NYSE:AV - news) has climbed 664 percent. Though Golub emphasized he was not commenting on the outlook for specific companies, he suggested investors should be seeking companies with strong earnings and balance sheets. "There are a lot of stocks that are up because people are finding it attractive on a momentum basis," Golub said. For sure, they are not buying such high-octane stocks because they are cheap. Sanmina-SCI is trading at 71.5 times its expected earnings for the 12 months ahead, Nortel at 64.4 and Corning at 49.1, according to Thomson First Call. By comparison, Microsoft's 12-month forward price-earnings multiple stands at 23.9 times and IBM at just 17.9 times. THE DEFAULT OPTION "I would not call it a speculative bubble yet, but it is looking more and more like it," said Barry Randall, senior equity portfolio manager for US Bancorp Asset Management, which oversees $118 billion in assets. Randall refers to the current upward trend in tech stocks as a "helium market" where "the default option is to go up." Randall, who said he owns Nortel because of its cash stream, said stocks such as the Canadian telecom company and Lucent are being bought as momentum plays even though investors "know these are not the stocks they once were." Prices alone should emphasize that fact to investors. Corning recently traded at $8.23, a far cry from its high in September 2000 when it peaked at $113.10. Lucent, at $1.89, remains far below its closing high of $83.81 in December 1999.