Tech Researcher Downgrades Big Names, Warns Of 'Ghost Town'
12 Janeiro 2009 - 5:26PM
Dow Jones News
A research firm specializing in technology stocks told its
clients Monday to avoid investing in some of the sector's biggest
names.
In a series of notes describing the first half of 2009 as a
"consumer ghost town," Broadpoint AmTech Inc. downgraded ten
technology stocks, including Amazon.com Inc. (AMZN), Dell Inc.
(DELL) and Cisco Systems Inc. (CSCO).
"While we realize that investors are aware that 'it's bad out
there,' we are not sure they realize quite how bad," analyst Tim
Boyd wrote in a research note. "The consumer has put on the brakes
hard in January."
Boyd and other Broadpoint analysts drew their conclusions after
attending the annual Consumer Electronics Show last week in Las
Vegas. They reported that nearly every one of the more than 40
companies they met with at the show were "extremely bearish" in
their near-term demand outlooks and said they were going to make
cuts to their work forces.
The firm said it downgraded stocks where it felt that demand was
"far from the bottom," and that face long-term trends that will
hurt the value of the stocks through the recession. The firm
downgraded to sell from neutral Dell, Garmin Ltd. (GRMN) and Nokia
Corp. (NOK), and downgraded to neutral from buy Akamai Technologies
Inc. (AKAM), Cisco Systems, and Marvell Technology Group Ltd.
(MRVL).
Broadpoint AmTech also downgraded online retailers Amazon.com
and Blue Nile Inc. (NILE) to sell from neutral, and Yahoo! Inc.
(YHOO) and Bidz.com Inc. (BIDZ) to neutral from buy, based on what
it said were unrealistic expectations and valuations.
Shares of all ten companies fell in recent trading, and
underperformed the Morgan Stanley Technology Index, which declined
2.1%. Online auction retailer Bidz.com saw the largest percentage
drop among the companies Broadpoint AmTech downgraded, declining
10.3% to $3.66 in recent trading.
Broadpoint AmTech also cut earnings forecasts already well below
the Street's consensus for 20 companies, including Google Inc.
(GOOG), Hewlett-Packard Co. (HPQ), Texas Instruments Inc. (TXN),
Nuance Communications Inc. (NUAN), NVidia Corp. (NVDA), Seagate
Technology Inc. (STX), Broadcom Corp. (BRCM), Atheros
Communications Inc. (ATHR) and Motorola Inc. (MOT).
Another report Monday on the CES show, by Barclays Capital
Research analyst Tim Luke, corroborated the bearish view of the
Broadpoint AmTech analysts. "We found few key themes to inspire
investors and consumers beyond well-previewed focus on netbooks and
smartphones," Luke said.
Even the few bright spots in the technology sector, smartphones
and netbooks, carried some troubling indications for other parts of
the tech sector. Some of the established cell phone companies are
struggling to keep up with the pace of innovation of the new
smart-phone companies, Broadpoint AmTech analyst Mark McKechnie
said. His downgrade of Nokia to sell was based in part on the
company's "longer term issues in smart-phones."
And while netbooks were one of few hot products at the CES show,
the analysts said netbooks are having a deflationary effect on the
rest of the PC market. The trend toward netbooks and low-cost PCs
will accelerate the declines in PC average selling prices, the firm
said, and hurt gross margins as the premiums on full-sized PCs
diminish.
Barclays analyst Ben Reitzes also pointed to the dark cloud
behind the silver lining of netbooks. "It seems that netbooks are
cannibalizing notebooks, rather than fully expanding the category
as some have predicted," he said.
-By Ed Welsch, Dow Jones Newswires; 201-938-5244;
edward.welsch@dowjones.com
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