Sunday, November 11, 2007

Is Technology On Sale?

Is Technology on SaleTechnology was the hot sector till last week. Gartner was projecting higher spending on technology in 2008, capital spending is up on IT infrastructure, outsourcing is a means to reduce cost or more business for the IT services companies and then we have last week. IBM down more than 6%, Google down 10%, Intel down 7%, Cisco down 15%, Accenture down 20% - is the IT sector imploding or are some IT companies on sale?

Growth: Today IT is a growth industry. If any business is not investing in IT, it will become less competitive in the market. New products, offering and web usage trends are being adopted by top lines companies to provide targeted services, more customer interaction, better advertising and a global experience. Technology is enabling the next generation of business offerings and that means growth for technology players.

Outsourcing: It's not a fad but a reality. Cheap labor, better quality and faster delivery are the drivers in todays world. The world is flat and you leverage the best for your business. The Infosys (INFY), Cognizant (CTSH), Accenture (ACN) and IBMs (IBM) are ready to provide a global IT support strucutre for your IT applications. I expect strong growth in this space over the next few years.

Global Consumer: The innovation cycle is feeding the global consumer demands. Newer models are being developed faster and adopted quickly by the burgeoning middles class in Asia, Eastern Europe, Latin America and Middle East. Commoditization of cheap and affordable gadgets is a boon for innovators (Apple and RIM), hardware manufactures (IBM, Nokia, Samsung, Intel), service providers (Infosys, Accenture and IBM) and advertisers (Google). Is the global boom over or is it just starting?

There are risks and the forecast for years to come may not be so rosy. I believe that technology has valid reasons to be bullish. And if you are bullish then a 5-15% drop is prices certainly looks like a sale!

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1 comment:

Trader K said...

Technology stocks got overbought. Prices had become frothy and this correction has brought back some sanity. Not sure if the bottom has been found and more discounts may be available. I would not buy just yet.