Game Could Be Over For Making a Profit On the Tech Recovery
Major League Baseball has begun its midsummer break. Technology investors are debating whether their season may be over.
Intel Corp. and other computer-related companies this week should report better quarterly results than they did this time last year. Yet a spate of earnings warnings and other indicators suggest the technology recovery is further along than many investors had realized. Even without negative surprises -- and bears see more on the way -- there are few signs of a late-inning rally that would produce additional gains in tech stocks.
The uncertainty is particularly pronounced for companies exposed to the market for personal computers. "We're already in the seventh inning of a PC market recovery," says Rob Cihra, an analyst at brokerage firm Fulcrum Global Partners. Sunil Reddy, portfolio manager of Fifth Third Technology Fund, adds that the pace of tech growth, which has rebounded for many companies for four to eight quarters, is now "unsustainable."
Yet PC demand is just one of many forces propelling technology stocks, some analysts and money managers point out. Other segments, including specialized computer chips and chip-manufacturing equipment, haven't hit their growth peaks. Even in slower-growing fields, stock-market winners, as well as losers, are likely to emerge.
"We are watching six games being played simultaneously," says Drew Peck, an analyst at America's Growth Capital. "Each is in a different inning."
Intel, the bellwether maker of electronic brains for PCs and other products, crystalizes the debate. The bullish case for the stock: Intel dominates a huge market, which should get bigger as corporations step up PC upgrades and as more consumers in China, India and Eastern Europe get hooked to the Internet.
The company, which will report second-quarter results tomorrow, has spent heavily on capacity that can churn out faster chips more efficiently than competitors. Even if PC sales slow, laptop sales are increasing, and Intel commands higher prices per chip in that market. Some analysts, such as Adam Parker of Sanford C. Bernstein & Co., predict Intel will signal normal seasonal demand for chips over the summer period, and conditions could improve later in the year.
The bearish case focuses largely on one statistic -- inventories of unsold microprocessors -- that rose 11% in the first quarter from the fourth period. Intel has offered a benign reason for the buildup, stating that it was able to produce more working chips per wafer of silicon on its new manufacturing process than it expected.
Whatever the reason, however, concern over inventories has helped take Intel's stock down 21% since early January. Analysts fear that excess inventories eventually will have to be unloaded at low prices, reducing Intel's closely watched profit margins.
And, while the potential supply of Intel's chips has risen, demand also looks shakier. The companies in Taiwan that build most PC circuit boards sold 14% fewer units during the second quarter than the first, estimates Michael McConnell, an analyst with Pacific Crest Securities, and are expected to see sales increases of 15% to 20% in the third quarter, down from prior forecasts of 20% to 25% growth.
Though Mr. McConnell remains bullish on Intel, he says investors will lose patience if management doesn't signal that chip inventories will come down. He also is looking for positive signs about stronger corporate PC demand. "The consumer, frankly, is tapped out," he says.
But recent earnings preannouncements haven't augured well for corporate technology demand. Steve Milunovich, an analyst at Merrill Lynch & Co., says 28% more technology earnings revisions were positive than negative in June, down from 35% for May and 45% during January.
Those figures don't include the slew of preannouncements since June 30, many of them by enterprise-software companies that failed to close major sales deals in the quarter. Despite reassuring remarks by SAP AG Friday -- suggesting that not all software companies are feeling the pain -- some observers see signs that corporate buyers are cautious about technology spending generally, rather than just on software. Computer maker Unisys Corp., for example, also warned Friday it wouldn't meet Wall Street expectations.
Jeff Van Harte, a portfolio manager at Transamerica Investment Services, argues that companies are buying only technology that produces clear productivity benefits, compared with the more-indiscriminate spending of past booms. "It's a very different cycle," he says.
How are investors reacting? David Eigen, who runs the hedge fund Lego Capital Management, says he is considering taking a short position in Intel's shares, though he has great respect for the company's management. "When one combines Intel's and other PC-component suppliers' inventory builds and the rapidly creeping questions about domestic and Asian end-user demand, it may make for ugly times ahead," he says.
Fred Hickey, editor of the High Tech Strategist newsletter, says he has already stocked up on put options on Intel, betting the stock will fall. The longtime bear argues that investors are making a fundamental mistake in assigning high price-earnings multiples to tech stocks such as Intel at a time when maturing technology companies are largely driven by macroeconomic factors.
Besides corporate caution about technology, he notes that tax- and interest-rate cuts that artificially stimulated U.S. consumer demand have been played out, and consumer demand in China may be slowing. "We are in a whole new ballgame," Mr. Hickey says.
George Gilbert, co-manager of Northern Technology Fund, says it has been trimming semiconductor stockholdings over the course of the year, figuring growth peaked in the second quarter or possibly the first. Others are investing more selectively. Mr. Reddy, of Fifth Third Technology Fund, says he is focused on blue-chip names in his portfolio, including computer maker International Business Machines Corp., software behemoth Microsoft Corp., networking company Cisco Systems Inc. and storage leader EMC Corp.
Jason Maxwell, a senior vice president at portfolio-management firm Trust Co. of the West, says his strategy is to pick tech names that are either undervalued or have particularly strong prospects. Names he cites include Red Hat Inc., a leader of the Linux software movement, and Network Appliance Inc., a maker of data-storage systems.
But Transamerica's Mr. Harte is shunning most tech names. "A lot of the stocks are expensive, and the sector has already had a good run," he says.
科技业复苏进入了夏季休赛期？
美国职业棒球大联赛(Major League Baseball)进入了夏季中期的休赛期。科技类股投资者也开始讨论，他们的赛季是否已结束。
英特尔(Intel Corp.)及其他几家与电脑有关的公司本周应该能够公布好于上年同期的收益报告。但此前发布的一系列公司预警和其他指标显示，科技业的复苏似乎并没有像人们想像的那样仍在顺利继续。即使未来不出现负面的意外消息（看空人士认为未来会有更多负面消息），就目前而言，也没有什么迹象显示存在推动科技类股进一步上扬的动力。
涉足个人电脑市场的公司尤其前景难测。Fulcrum Global Partners的分析师罗布?奇赫里(Rob Cihra)说，就好像是一场棒球赛，我们已进入了个人电脑市场复苏的第七局。Fifth Third科技基金的投资组合经理桑尼?雷迪(Sunil Reddy)补充说，科技业的增长步伐很难持续下去，很多公司已经连续4-8个季度强劲增长。
但一些分析师和投资经理指出，个人电脑需求只是推动科技行业复苏的因素之一。科技行业的其他部门，包括特殊用途电脑晶片和晶片制造设备等，仍未达到增长高峰。即使是在增长相对缓慢的领域，股市投资也会有赢有输。
America's Growth Capital的分析师德鲁?派克(Drew Peck)说，我们正在同时关注6场“比赛”，每场比赛目前所处的局数都不一样。
围绕晶片巨头英特尔的争论，显然是最具代表性的。看涨的理由是：英特尔在一个庞大的市场中占据主导地位，而且随著各公司开始对电脑升级，加上更多中国、印度和东欧的消费者开始上网，这一市场还会进一步扩大。
周二将公布第二季度业绩的英特尔，在改善产能上不惜重金，力争使晶片的运行速度及效率远远领先竞争性产品。即便个人电脑销量放缓，笔记本电脑的销量仍在增长，而且英特尔在笔记本电脑晶片市场上可获得更高的售价。Sanford C. Bernstein & Co.的亚当?帕克(Adam Parker)等分析师估计，英特尔可能会预测夏季将获得正常的季节性需求，而今年晚些时候形势会出现改善。
看跌一方将焦点放在了一个统计数据上：第一季度未售出的微处理器库存较去年第四季度增长了11%。对此英特尔给出了一个很好的理由：新的生产工艺使得公司在每个晶圆上生产出的晶片比预期更多。
但无论如何，库存担忧已令英特尔股票自1月初以来下挫了21%。分析师担心库存过多将最终导致价格下降，并挫伤一直备受关注的英特尔利润率水平。
在英特尔的晶片供给潜力提升的同时，需求却呈现了放缓趋势。多数个人电脑电路板产自台湾公司，而根据Pacific Crest Securities的分析师迈克尔?麦考马克(Michael McConnell)估计，台湾公司第二季度的销量可能较第一季度下降14%，预计第三季度将增长15%-20%，但低于原先预计的20%-25%的增幅。
尽管麦考马克目前仍对英特尔股票看涨，但他表示，如果公司管理层不明确表示晶片库存能够降下来，投资者可能不久会失去耐心。麦考马克还在努力寻找公司电脑需求是否有走强的迹象，他说，“坦率地说，消费者正在逐渐散去。”
但最近发布的收益预告一直未能预示出公司的科技需求增长。美林公司(Merrill Lynch & Co.)的分析师史蒂夫?米卢罗维奇(Steve Milunovich)说，在科技行业中，6月份上调预期的公司数量比下调预期的数量多28%，低于5月份的35%和1月份的45%。
上述数据没有包括6月30日以后发布的收益预告，后发布收益的很多都是企业软件公司，他们未能在第二季度达成大额销售交易。尽管SAP AG上周五发表的关于并非所有软件公司都陷入困境的言论给市场吃了一粒定心丸，但一些观察人士发现，公司总体上对技术支出颇为谨慎，不只是针对软件支出。例如电脑制造商优利系统(Unisys Corp., UIS)上周五也警告称，它很难达到华尔街分析师的预期。
Transamerica Investment Services的投资组合经理杰夫?范?哈特(Jeff Van Harte)称，公司现在只购买能够立竿见影带来效益的技术，而不再像上次科技泡沫时期那样不加选择地乱花钱了。他说，这轮复苏与以往截然不同。
那么投资者反应如何呢？管理对冲基金Lego Capital Management的大卫?艾根(David Eigen)说，尽管他对英特尔的管理层非常欣赏，但目前正在考虑建立英特尔股票的空头头寸。他说，如果你把英特尔和其他电脑零部件供应商的库存状况与美国和亚洲终端用户的需求联系起来，就不难看出未来的前景有多黯淡。
High Tech Strategist时事通讯的编辑佛瑞德?希基(Fred Hickey)说，他已经积累了一些英特尔的卖出期权，把赌注压在该股下跌上。这位长期看跌英特尔股票的人士称，投资者在对英特尔等科技股给予高昂的本益比时犯下了一个根本性错误，因为目前成熟科技公司的业绩主要受宏观经济影响。
他指出，除了企业对技术支出更加谨慎外，为刺激美国消费者需求而一度实施的减税和降息政策也已基本完成使命，而且中国消费者的需求可能也在放缓。希基说，“我们已经进入了一场全新的比赛。”
Northern科技基金的联席经理乔治?吉尔伯特(George Gilbert)说，今年该基金一直在减持半导体类股，估计该行业的增长可能在第二季度、甚至可能在第一季度就已达到顶峰。其他人则是更有选择地在投资。Fifth Third科技基金的雷迪说，他在投资组合中重点关注蓝筹股，包括电脑制造商国际商业机器公司(IBM)、软件巨头微软公司(Microsoft Corp)、网络公司思科系统(Cisco Systems Inc.)和存储先行者EMC Corp等。
投资组合管理公司Trust Co. of the West的高级副总裁杰森?麦克斯韦(Jason Maxwell)说，他的科技股选股策略是选择那些被低估的或前景特别强劲的股票。他提到的公司包括Linux软件倡导者Red Hat Inc.和数据存储系统制造商Network Appliance Inc.。
但Transamerica的哈特对大多数科技类股退避三舍，他说，很多股票过于昂贵，该类股已经经历了不错的上涨。
