AFI BLOG: Media and Technology

Time to Start Buying Dips in the Technology Sector - Seeking Alpha

Fears of a slowdown in the U.S economy have pummeled the shares of leading technology companies. Cisco (CSCO), Apple (APPL), Google (GOOG), Intel (INTC) and Microsoft (MSFT) are trading significantly below (25-40%) their highs reached a few months ago. A number of these stocks had done exceedingly well during 2007 so some of the pullback is expected. However, the market has been very unforgiving about slower forecasts.

In the age of SOX, you expect CEOs to be very cautious about any future predictions. Further, when the air-waves are full of doom and gloom prognostics about a recession, CEOs can not go out and claim that everything is rosy. However, the market reaction is overdone.

Even in an economic slowdown, companies continue to invest in technology. This is because technology investments have a strong correlation with growth in productivity and companies cannot get behind the curve for too long. Further, in spite of the economic slowdown, corporate balance-sheets are still looking good.

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