Tech stocks are beginning to look like bank stocks. Yesterday, Intel (NASDAQ: INTC) hit a 52-week low at $12.05, down by about half from its 52-week high. Cisco (NASDAQ: CSCO) came within a few pennies of its low. So did Oracle (NASDAQ: ORCL).
Should these stocks trade so low? Almost certainly not.
The first factor in favor of the largest tech companies is that most have billions of dollars in cash on their balance sheets and often no debt. The majority of big firms in the sector are still profitable and add to their cash balances every quarter.
It is also not clear that companies like Oracle are going to lose money this year. Their profits may be down, but that drop may be fairly modest. Oracle makes a lot of its money from software service contracts, which can be in place for years.
If there is a sector that has been "over-sold," it is tech. No other industry has so many of it major corporations with massive cash reserves and a reasonable chance to make it through the recession without losing a dime.
Douglas A. McIntyre is an editor at 24'/7 Wall St.
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Reader Comments (Page 1 of 1)
2-24-2009 @ 11:54AM
BHarrison said...
The "bottom line" is that everything just got too out of balance with reality . . . prices were escalated to the point that they became unaffordable. Add to that the fallout damage of the frauds of Madoff and Stanford, which are only the tip of the icebergs in regard to these frauds that will be surfacing.
Our economy and society are simply grossly out of balance. The excess inventories of condos, private homes, commerical real estate, and automobiles is going to dramatically exacerbate any recovery efforts. There will be no employment for hunreds of thousands and millions of workers in the automobile industry, and the construction industies.
The basic problem is that everyone's cost of living is based upon the previous income levels . . . and THAT includes the city, county, and state governments dependence on tax revenues based upon those higher salry levels . . . everything is TOTALLY out of balance.
It is going to be an extremely long and painful economic period for all of these imbalances to settle out . . . it isn't going to occur in a couple of years. This is going to take a decade or longer.
The VAST MAJORITY of the BLAME rests with our CORRUPT Congress who ENABLED and ALLOWED the corporations to orchestrate and to perpetuate the FRAUDS of the pyramid and Ponzi schemes, the "derivatives" FRAUDS, and other frauds.
Are people so stupid that they are going to allow these CORRUPT Congressmen to remain in office? BOTH the RNC and the DNC are controlled behind the scenes by the elitists corporate/ultra-wealthy special interests . . . we need at least one or two new political parties to counter the CORRUPTION of the Republican and Democratic party. It IS POLITICAL CORRUPTION that has undermined our economy.
Congress "sold out" our nation and the American people for LESS than a penney on the dollar . . . and then they gave themselves a pay raise.