OSO check this out (maybe now that we know you are the 2 year Mangy Bull I guess this will no longer be of interest :-)))))) ) As this Mangy bear had speculated (based on stolen impure thoughts from Briefing.com) analysts had not yet reduced their estimates. Well it looks like they've begun. Now we shall see whether the current stock prices take these reduced earnings into account.
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PALO ALTO, Calif., Dec 9 (Reuters) - Technology stocks likely will
lag behind the rest of the stock market for the next three months as
Asia's economic illness eats into the earnings of U.S. computer
companies, analysts said Tuesday.
Wall Street analysts are slashing earnings forecasts for most segments
of the computer industry, particularly chip makers, disk drive
manufacturers, telecommunications and semiconductor equipment
makers. Cuts in earnings forecasts usually drag down stock prices.
"They're definitely cutting estimates across a wide spectrum," said Ben
Zacks, executive vice president of Zacks Investment Research, which
specializes in tracking analyst earnings estimates. "I think this time it's a
little more than just a tech scare."
The latest victim of Asia's troubles was software publisher Oracle
Corp., which reported a nasty earnings shortfall Monday. Oracle,
which gets about 50 percent of its revenue from abroad, said weak
Asian sales likely will hamper its growth for at least two more
quarters.
Even technology companies that aren't as dependent on business from
Asia also face tougher times in coming months because their
customers likely include companies that do rely on Asia for revenue.
"If we get a slowdown in companies like Oracle and they cut back on
capital spending, those companies that sell them PCs, for example,
could be hurt as well," said Marty Hurwitz, senior portfolio manager
with American Express Financial Advisors, a mutual fund giant.
On Tuesday, most technology stocks were down following Oracle's
warnings. In midafternoon trading, Oracle shares had dropped $9.75,
or 30 percent, at $22.625 on volume of 160 million shares.
Intel Corp., the world's biggest chip company, was down $2.69 at
$75.75. Microsoft Corp., the biggest PC software company, was
down $2 at $144.125, Compaq Computer Corp. fell $2.69 to
$62.75. And Cisco Systems Inc., the biggest networking equipment
vendor, slipped $2.56 to $87.19.
Analysts said semiconductor stocks would be hit hardest by Asia.
Countries like Taiwan and South Korea invest heavily in their
semiconductor industries. Because of the threat of bank closings,
loans and financing are harder to come by, so Asian semiconductor
companies have had to slash their expansion and spending plans.
Last week, for example, South Korea's Dongbu Group scrapped
plans to open a $2 billion memory chip plant because of tight
financing.
That means less orders to U.S. suppliers of semiconductor
manufacturing equipment like International Business Machines Corp.,
Applied Materials Inc. and Novellus Systems Inc.
"We took our sector rating on semiconductor equipment down a
while ago," said John Rohal, director of research at investment bank
BancAmerica Roberton Stephens.
On top of that, falling Asian currencies are making Asian memory
chips cheaper abroad. That is putting enormous pressure on U.S. chip
makers, like Texas Instruments Inc. and Micron Technology Inc., to
slash their prices and profits to compete.
Even the earnings of Compaq and Dell Computer Corp. -- which
have said they do not expect any impact from Asia -- will eventually
come under pressure as PC prices fall, analysts said.
"It's not just about Asia. Price cutting and the strength of the dollar
was putting margin pressure on these companies even before the
Asian debacle," Zacks said.
Still, some technology stocks, particularly in the software industry,
remain attractive. Stocks like PeopleSoft Inc., SAP AG and Baan
Compay NV could continue to thrive, since their software products
help big companies run their operations more efficiently, Rohal said.
And the long-term outlook of the semiconductor equipment makers
looks "pretty good," because the semiconductor industry will have to
spend lots of money in coming years on new types of devices to make
smaller and faster chips, Hurwitz said.
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This mangy bear loves articles that support his viewpoints. So he loves this one... because it highlights and summarizes the important issues here (mostly whispering - it's a cemetery I tell you - a dead zone):
1. short term pressures as cheaper foreign products compete
2. real n/t effect on semi-equips
3. but l/t semi-equips are fine as semi-"build or die" mentality is good for semi-equips.
4. EPS were not going down - now they are.
5. strong dollar bad
6. U.S. market blissfully ignoring above...
Having said that some stocks have discounted all the above and the coming of the Mother of All Mideast Rulers to take over the world.
(added my own little evil thoughts - of course contrarians like the OSO can rejoice at these words)
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And the fight still goes on - 19 or 27 - we mangy craven anatomically correct bears never give up, never...
not until our faces are buried in the mud by the oncoming onslaught of the manic-depressive bulls who right now cannot decide to go up, down, sideways, forward, backward, north, south, zig-zag, dance the macarena, do the watoozee, like the Spice-Girls... EVERYONE'S CONFUSED I TELL YOU >>> THEY ARE ALL LOSING IT >>>> RUN AND HIDE >>>>> TITANIC BEAR MARKET... |
