2HRS2GO: Uncertainty still haunts tech budgets

3 min read

COMMENTARY -- Was there any good news from tech companies in the last 24 hours?

Network Associates (Nasdaq: NETA) and LM Ericsson (Nasdaq: ERICY) bled more than expected. Broadvision (Nasdaq: BVSN) spent more than expected. PMC-Sierra (Nasdaq: PMCS) pulled the rug out from beneath the entire field of broadband networking chips.

Those are top tier companies in their respective markets, all reporting varying degress of disappointment. No wonder the Nasdaq Composite Index opened almost 50 points lower this morning.

Yet techs recovered quickly. Yes, three of the four aforementioned names are down -- Network Associates isn't anymore -- but the Nasdaq as a whole bounced back in late morning and early afternoon. The Index is up 16 points as I type this.

Credit (or blame, depending on your point of view) Alan Greenspan for it. Despite the blitz of lousy financial reports, the market prefers to focus on the upcoming meeting of the Federal Open Market Committee.

Greenspan's testimony before Congress yesterday included more bemoaning about the economy. He didn't say anything that hasn't been uttered before, but it reinforced the market's hope that the Fed will cut short-term interest rates by another half point. He also suggested that a tax cut wouldn't be so bad, though he added that it won't help the economy right now.

But even if the Fed slashes rates as expected next week, don't expect tech earnings to bounce back immediately either.

No one in the tech industry sees a rebound before the second half of this year. It will take at least that long for shell-shocked companies to regain their bearings.

During a conference call with analysts yesterday, Broadvision CEO Pehong Chen said his company's survey of chief information officers continued to indicate plenty of uncertainty about the next few months. Expect that to be reflected in the stock market as well, rate cut or no.

Credit where credit is due

While we're talking about Broadvision, let's give analysts some credit. Two research firms, ABN Amro and CS First Boston, cut their BVSN ratings in December to a chorus of boos from individual investors. And at least two others, Moors Cabot and The Robinson-Humphrey Co., reduced estimates ahead of the fourth quarter report.

Everyone loves to accuse analysts of playing games, generating slipshod research or issuing useless downgrades after the fact. Those are often valid criticisms, and I've leveled them myself many times.

However, there are analysts who try to do their jobs. There are researchers who try to make the right calls and provide cogent advice. There are brokerage firms who aren't out to screw individual investors.

The problem is that it's not always easy to tell who is wearing the white hats. But why bother?

Stick to your own investing methods, instead of spewing at analysts who happen to downgrade a stock you like. Read the analyst reports you can get ahold of, and if you disagree, fine.

Just don't waste your breath and ire on them, because they're not out to get you. No one on Wall Street is -- they're just trying to make money. 22GO>