HI-TECH SPRING 1999
"BIGGEST LOSERS will be the INTERNET STOCKS twinly
afflicted by Saturn/Uranus and Y2K
by the second half of the year. Expect a minimum of 50%+
losses for many of these "tulip" companies. Years ago, as a computer
analyst, I wondered how Internet companies would eventually make money
- what mix of advertising, subscription and/or e-commerce models.
The right answer was none of the above - but to sell stock to the public
or be acquired by an old-line media company!"
Since the above was written last December, the Internet index has clearly
peaked and article after article has been written why the Internet stocks
will drop ranging from "over-priced" to "over-supply".
When do we changing our tune and become buyers? Of the big four
Blue Chips [YHOO, AOL, AMZN and EBAY], we intend to stop selling rallies
on Yahoo as soon as it reaches 20 [40 pre split]. AOL? We have our
BUY orders ready for 17! Neither AMZN or EBAY are buys this year
or next, in our view, from ANY PRICE.
Our basic forecast: Bubble or "Internet" plays can expect at least
68% correction from 1999 highs as they are truly the junk bonds of the
1990's.
Good Companies, Good Horoscopes
Motorola (MOT) had been the most reasonably valued of the
Hi-Tech companies that we admire, but no more is the bargain it once was.
The one stock will be buying over and over again on dips is IBM,
which will be the number one star performer in 2000. As to the rest,
we will wait and see as technology stocks get smashed on Y2K fears.
COMPUTER HARDWARE COMPANIES
Due to the Asian Crisis, this industry group will remain unattractive all
year except for special situations i.e. M & A plays. We expect big
price wars and declining profits for the rest of 1999. Computer pricing
will continue to drop like rocks, and taking it with it the bottom line
of most companies. The push toward $300 computer systems will continue
to hurt not only manufacturers, but computer stores.
COMPUTER SOFTWARE
Main looming issue is the legal liability of Y2K problem.
Our only long term investing buy this quarter is BAAN (BAANF).
Our watch list of future possible Software buys include:
Oracle, (ORCL)
Intuit (INTU),
Symantec (SYM)
Novell (NOVL)
TECHNOLOGY DOWNGRADES
From Out perform to Market Perform:
Intel (INTC)
Compaq (CPQ)
Lucent (LU)
TECHNOLOGY FAVORITES
From MUCH lower prices, we plan to eventually to add to our five
core Technology holdings. These technology favorites are recommended for
gradual accumulation AFTER the Fall, or if your mandate MUST invest:
Sun (SUNW)
Motorola (MOT)
Lucent (LU)
International Business Machines (IBM)
Sony (SNE)
While we will continue our practice of selected quarterly updates on
computer stocks here, serious investors and traders can receive more timely
updating in our forthcoming Wall Street, Next Week subscriber premium channels
UP
STARS, DOWN STARS.