Wednesday, January 11, 2006

Tech is back

Tech – consumer, not business -- is leading the way in 2006.

Stocks in the technology sector are up 1% today and 6% so far in 2006. Semiconductors and hardware continue to be the sector’s strongest industries; the SOXX is now up 1.6%, while the AMEX Computer Hardware Index is 1.7%. Since the beginning of the year, those indices are up 10.0% and 7.8%, respectively.

But dig underneath the surface and you see that this year’s tech winners make their money selling to consumers – not the mix of business and consumers that characterized the 1990s Internet boom. For example, the big stock market winners over the last year include:

  • Google +135%
  • Apple +130%
  • Adobe +33%
  • SanDisk +209%
  • Lexar Media + 41%

Compare this to the relatively moribond business tech companies:

  • IBM -11%
  • Microsoft +3%
  • Cisco Systems +1%
  • EMC -3%
  • Sun Microsystems +7%

I don’t know whether it’s too late to get in on this boom. Certainly NASDAQ still trades 54% below its March 2000 peak. And the venture-backed technology IPO market remains far from the exuberant levels it enjoyed in the late 1990s. With consumer technology still coming up with wildly popular new products and services, the profitable growth underlying the recent consumer tech stock boom may be able to continue for a while. Meanwhile, until the business tech companies can launch products that unleash a quantum leap in productivity, corporations seem unwilling to open their bulging wallets for IT.


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