Clicking on banner ads enables JWR to constantly improve
Jewish World Review Sept. 5, 2001 / 16 Elul, 5761

James K. Glassman

Jim Glassman
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

Tech firms built to last through tough times --
STOCK prices are about the future. More specifically, the price of a share of stock reflects investor belief in the future earnings of the company. Depending on how much the firm's earnings, or profits, are expected to increase over time, one share of the company will trade at a higher or lower multiple of its earnings.

So in this environment, with the future looking pretty bad for almost everyone in techland, it can seem almost impossible to evaluate potential investments. What's the right price for a company with weak earnings, or no earnings, or even losses? You can look at a company with falling earnings, plot out a bleak future and ultimate bankruptcy, and then assign a very low valuation to the company, but of course current earnings reports only reflect a moment in time. If the firm has a history of strong performance, then the current troubles may simply be the temporary result of a lagging economy. When the economy turns around, or when a specific market comes back to life, the conditions for the company are apt to change very rapidly.

For long-term investors then, it may be useful to focus on the particular strengths of the company, and not on the most recent quarterly report, the state of the economy, GDP growth, or Alan Greenspan. Forbes ASAP, the technology supplement to Forbes magazine, polled hundreds of securities analysts to come up with what the magazine calls, "The Dynamic 100." ASAP asked the analysts to rank the firms they cover in seven categories, described by Forbes' Eric Pfeiffer:

  1. Change: How well does the company respond to change?
  2. Opportunity: How big is the potential market for the company's products?
  3. Sell: How well does the company respond to its market opportunity?
  4. People: How strong is the company's human capital?
  5. Alliances: How strong are its partners and its relationships?
  6. Ramp: How fast is the company growing, and can it continue to ramp up quickly?
  7. Financials: How strong is the company's overall financial health?"

I believe these are the right questions, but why, you might ask, do we want to ask the opinions of securities analysts? Aren't they the conflicted hypesters who peddled so many dot-com dogs to us in a mad rush for investment banking business? Well, stock analysts at the big investment banks have been getting kicked around in the press lately, perhaps with good reason. But it's worth remembering that these analysts, no matter what axes they may be grinding for their firms, tend to know an awful lot about the companies they cover. In fact, a big reason that they've become notorious for bad calls is that journalists lean on them very heavily for information about companies and markets. The prominence of these analysts is largely the result of ignorance on the part of reporters who need jungle guides to interpret market moves.

And in this particular case, in which analysts are responding to a poll about certain qualities and which companies have them in abundance, I think the analysts may be a little more candid than they are when they have to make very public buy/sell recommendations on bank clients. Of course you should always keep in mind that analysts may have financial incentives behind their recommendations, but I think the results of this poll could be instructive. And if you're looking to devote a portion of your portfolio to shares in tech companies, I think you'd do well to divide the money among the highest ranking firms in several categories. Here are the most dynamic firms in several tech markets, according to Forbes ASAP:

Software: Mercury Interactive (Ticker symbol: MERQ)

Wireless/Telecommunications: Openwave Systems (OPWV)

Biotech: Genentech (DNA)

Network and Telecom: Sonus Networks (SONS)

Peripherals: Sanmina (SANM)

Not a bad group for the tech dollars in your portfolio.

JWR contributor James K. Glassman is the host of Tech Central Station. Comment by clicking here.


08/23/01: Stocks on the A-List
08/17/01: Labor and management finding online learning to their liking
08/08/01: Game makers poised to profit
07/19/01: Trade Promotion Authority: High-Techís Key Component for Competitiveness
07/12/01: Nothingís arbitrary about the contrarians
06/27/01: Look to Politics to Find Broadband's Market Cap Shortfall
06/22/01: Tech Commodity Buys Available for Mining
06/18/01: The Blackout Portfolio
06/14/01: The conservation myth stars as latest (sub)urban legend
06/07/01: Will America go high tech on the high seas?
06/05/01: 'Price gouging' doesn't cut it as reason for rising energy prices
06/01/01: Authentication tools opening up opportunities in online security
05/25/01: 'Price gouging' doesnít cut it as reason for rising energy prices
05/21/01: Banking on High-Tech Education
05/17/01: It's No Time to Go Wobbly on Kyoto
05/02/01: Diversify with techís leaders
04/26/01: To Revive The New Economy, Release A Chokehold   —   Break Up The Bells
04/24/01: Whoís To Blame For Broadband Crisis? Wired Article Points To Bells
04/19/01: The Bush Budget
04/12/01: To revive The New Economy, release a chokehold --- break up the Bells
04/04/01: Even as stocks have fallen, the Net keeps booming
03/28/01: Whereís The Profit In Biotech Future?
03/22/01: The Joy of Debt: The last thing we should want is a U.S. Treasury flush with cash
03/19/01: 'Defensive' Stocks in the NASDAQ
03/15/01: Bush administration must say no to Jane and Kyoto
03/08/01: Time to buy small caps? Consider these five great techs
03/01/01: Billís and Larryís continued political adventures
02/26/01: Chips on the Dips?
02/23/01: How Tauzin Can Keep His Word And Stop Telecom "Remonopolization"
02/13/01: Consumers, WAKE UP! Middlemen are ripping you off
02/02/01: Publicity-Seeking Politicians and Contingency-Fee Lawyers Corrupt the Law
01/26/01: DoubleClick, eBay And Their Promising Ilk
01/24/01: Will Cyberspace Look Like France or America?
12/27/00: Cut interest, taxes and regulation to save high-tech economy
12/20/00: Close, But No Big Czar
12/15/00: A Down Year? Maybe. But Letís Put It in Perspective
12/13/00: Clintonís sorry midnight race into history
12/07/00: Is Telecomís Future The Bells, The Bells, and Only The Bells?
12/01/00: Money talks and walks in election aftermath
11/29/00: Climate Treaty Deadlock Shows Lack of Consensus and Common Sense
11/23/00: Climate change participants donít listen to reasons for uncertainty
11/21/00: Will Regulators Create a Recession?
11/14/00: The Election and the Market
10/26/00: Hang on for the long term
10/25/00: On privacy, one size doesnít fit all
10/24/00: Perish the bearish thought
10/19/00: Beating hunger --- the biggest prize
10/13/00: Way to play biotech
10/12/00: Bush vs. Gore on Technology
10/11/00: Global Climate Scare: Fools Rush In
10/05/00: Avoid the Apple Trap
10/03/00: Goodbye, anti-Microsoft crusader --- and good riddance
09/29/00: Should You Invest in Tech IPOs?
09/27/00: Could technology end airline delays?
09/22/00: Donít Forget Small Caps
09/20/00: Is the New York Times Rooting for Disaster?
09/13/00: The Best Argument Against Net Regulation
08/30/00: Political Risk in Big Drug Stocks
07/27/00: Tech Dividends
07/25/00: Government Privacy Violators
07/20/00: If I Had to Pick One Tech Stock
07/18/00: Our Favorite Lawsuit
07/13/00: Silicon Valley East
07/11/00: Election 2000: Year of the Investor Class?
07/07/00: Adventures on the
07/06/00:The Difference Between Bill Gates and Larry Ellison
06/29/00: In the Chips
06/27/00: Free market wins in Federal Court!
06/22/00: Wireless Bargains?
06/20/00: Is Your SUV Warming the Planet?
06/15/00: Shopping for Government
06/13/00: Top 10 Tech Stocks
06/08/00: Riding the eBook Wave
06/06/00: "The Last Mile"
06/02/00: Keep Buying!
05/31/00: Who Asked the FTC to Regulate Online Privacy?
05/25/00: "When Itís Time to Sell"
05/23/00: End the "Telephone Tax"
05/16/00: Time Warner Gets a Bad Rap

© 2000, Tech Central Station