But finding the next hot stock trend will require more than indiscriminate picking from the right technology niche, said Dan Case, chairman and CEO of Chase H&Q, the investment bank that will host its widely followed technology conference next week.
Companies whose market valuations soared because of investor momentum in specific categories--not from a profitable business strategy--will get bought out or go bankrupt by the end of the year, Case said. The current stock market volatility is a reflection of investors' attempts to sort the strategic players from the poseurs.
"As the industry matures, a company's fundamentals will become more important than the segment," Case said. "Emotion will become less important."
Todd Bakar, director of Chase H&Q research, said certain investors will always look for a hot niche. But weary Wall Street veterans are increasingly looking to relatively time-warn segments of the tech sector, such as the semiconductor business, to find weathered blue chips instead of high-flying corporate newbies.
"There is a shift back to basics instead of the search for the sexy trend," Bakar said. "It's a dose of reality that has moved into valuation methodology...It's not that you have to have profits today; it hasn't gone to that extreme. But there's a greater degree of prudence and skepticism. People are stepping back from the psychology-driven market."
Bakar expects volatility to last at least six more months as investors search for consistently profitable companies and abandon attempts to capitalize on market momentum.
Case and Bakar are bracing for even more volatility in the short term, as their seminal technology conference promises to rattle the tech-heavy Nasdaq.
The 28th annual Chase H&Q Technology Conference, to be held Monday through Thursday in San Francisco, will feature presentations from executives at more than 300 companies. Companies range from software giant Oracle and old-economy stalwart Ford Motor to pre-IPO start-ups and besieged Linux firms.
The four-day conference at the Westin St. Francis Hotel is a favorite of Wall Street analysts, who often update their financial institutions via cell phones whenever an executive makes a market-moving announcement or projection. Their instant relays often push specific stocks up or down more severely than the overall market in daily and after-hours trading.
Publicly traded companies whose executives will give presentations at the conference include:
Oracle (Monday, 9 a.m. PT): The database giant is ground zero in the business-to-business e-commerce niche--a hot investment segment last year and in the first quarter of 2000, now tempered by Wall Street skepticism.
Sun Microsystems (Monday, 2:30 p.m. PT): The largest provider of the servers that make up the backbone of the Internet, Sun says that every device with a digital or electronic heartbeat, including light bulbs, can potentially be connected to the Web.
Phone.com (Monday, 3:30 p.m. PT): A provider of software that allows wireless telephones to access the Internet, the company has been hemorrhaging money while it attracts customers.
Excite@Home (Tuesday, 5 p.m. PT): The high-speed Internet access provider recently reorganized around three business groups, but several senior executives have announced their departures, raising questions about employee commitment to the company's new growth strategy amid faltering stock performance.
Microsoft (Thursday, 12:30 p.m. PT): The company is embroiled in an aggressive effort to save itself from a government-imposed breakup, as it faces the challenge of retaining talented workers amid a stock slump.