Analyst firm predicts e-commerce upswing
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IT investments in Web sites, combined with greater acceptance of online shopping on the part of consumers, will drive the growth.
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A good starting point to analyze a stock is the demand for its products.
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(InfoWorld) - With the first six months of the year gone, IT companies are riding high in the markets, and mergers and acquisitions have helped stoke investor interest in technology. The tech-heavy Nasdaq Composite gained 7.8 percent in the first half. The day before the U.S. Independence Day holiday on July 4, the Nasdaq rose 12.65 points to close at 2644.95, a six-and-a-half year high. Most analyst firms are still predicting modest overall global IT spending growth of about 6.5 percent above last year. But strong corporate earnings, better-than-expected growth in certain sectors, and M&A activity are contributing to a sense of exuberance, especially in certain sectors. Both Gartner and IDC have recently raised predictions, for example, for PC shipment growth this year. Now comes news that M&A deals continue to experience a torrid pace. For the first six months of the year, 1,930 deals worth about $347 billion were reported, according to The 451 Group. While the number of deals declined slightly from last year, the dollar value skyrocketed about 50 percent from last year, according to a 451 Group report. About half the deals involved acquisitions by public companies, and half involved private equity companies. Also, the pace of M&A is accelerating, according to the report. After $95 billion in M&A deals in the first quarter, second-quarter M&A spending jumped to $252 billion. IT is getting a lion's share of M&A dollars. For example, in the first six months of the year, IT services deals amounted to about $94.7 billion, while software deals excluding storage and security companies amounted to $27.6 billion, according to 451 Group. These days, M&A activity is being seen as a healthy sign. That was not always the case. "PE (private equity) used to buy broken companies," noted 451 Group financial analyst Brenon Daly. But now there are various reasons why IT services and software companies are targets, he noted. "It's not a great time to be a public company," Daly said. For example, there is a lot of scrutiny on companies being brought to bear by Sarbanes-Oxley rules, he noted. Thus, there are a lot of willing buyout targets, especially among smaller companies, he said. IT services companies are popular targets because once the difficult sales cycle is accomplished, long-term contracts lock in revenue for a foreseeable period, Daly said. Software companies in mature markets may see new license revenue slowing down but have a solid business in maintenance revenue. Though 451 does not track telecommunications deals specifically (telecom M&A is included in its total tally, however), recent telecom deals have also excited the market. For example, AT&T's announcement FridayÂ it would buy carrier Dobson CommunicationsÂ for about $2.8 billion helped lift the Nasdaq to its high level earlier this week. M&A deals help boost IT investor interest in several ways, noted Daly. First of all, as companies are bought and taken off the market as targets, there are fewer companies to invest in, even as a liberal lending regime continues to stoke opportunity and interest. Also, M&A sparks a continual guessing game of Who's Next? Excited investors essentially place bets on companies they think will be the next to be snapped up. It's not all smoke and mirrors, though. Several quarters of healthy corporate earnings have given a solid underpinning to investor interest in tech. The earnings-report season is getting underway in the next few weeks, and industry watchers will get a sense of how the next six months will play out.
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Shares of Google Inc., the world&#39;s most-used Internet search engine, may continue to rise as the company boosts advertising revenue, research analysts at securities firms that underwrote
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As the stock prices of companies like Google and eBay soar, happy days are here again for the Internet analyst.
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More investors are trading bean commerce for e-commerce.
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Which of these e-commerce behemoths has a brighter future?
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The electronic gadgets retailer talks up strategies for growth.
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(InfoWorld) - Now that the dust has settled after last week's stock-market plunge, industry insiders are looking forward to continued stable growth in the IT sector. When a plunge in Asian markets last week caused panic share-selling around the world,Â IT investors reassessed the technology sector's prospects for the year. IT vendors had enjoyed seven months of rising share prices up until last week. But last week, several leading analysts said that a long-overdue correction was occurring. However, brokerages were upgrading their share-buying advice on bellwether IT companies, even as markets in general were declining. The upgrades continued this week. For example, chip-equipment makers' share prices are rising this week as analysts foresee user hardware spending increases through 2008. Thursday, Applied Materials and KLA-TencorÂ shares rose after analyst upgrades. Morgan Stanley raised its rating on both companies to overweight from equal weight and raised its rating on the whole semiconductor capital-equipment sector to attractive from in-line. Also this week, JMP Securities raised it rating on AMD to market outperform from market perform, forecasting strong sales for new products. In the telecommunications sector, AG Edwards & SonsÂ upgraded AT&TÂ from hold to buy, predicting that demand for wireless communications will spark growth. Last week, even as markets were in turmoil, analysts issued upgrades in several sectors. Robert W. Baird & Co. upgraded AutodeskÂ from perform to outperform; Bear Stearns & Co., looking at BEA Systems' positive cash flow, upgraded the company from underperform to peer perform. JP Morgan upgraded networking equipment maker CienaÂ from neutral to overweight, basing its decision on what it expects to be a faster-than-expected recovery on optical communications market. The bottom line is that demand for IT products worldwide, while not expected to equal the heady days of 2000, is by most indicators expected to grow consistently this year into next. The transition to Vista and spending on Web 2.0 services are expected to help spur user demand, according to analysts. "Barring any geopolitical issues that could arise, solid single-digit growth is expected in technology," said Jim Lanzalotto, vice president of Yoh Services in Philadelphia, a personnel and outsourcing firm. The IT job market is generally seen to be a prognosticator of the IT market. "When companies hire, it's because they see a need to put people in place for increasing demand," Lanzalotto noted. "We're dealing with the leading indicator of the leading indicators," Lanzalotto said. In technology, there is demand this year especially for basic product development specialists, CRM specialists (particularly in the health care fields), IT project management, and Java and .Net specialists, he said. High-end jobs requiring specialized skills are driving the IT job market overall, Lanzalotto said. Lower-end jobs and specialties such as help-desk services are expected to experience weak demand in the U.S. as these jobs get outsourced, Lanzalotto said, though the services sector globally appears to be stable. On the user-demand side, consumer spending in areasÂ like upgrades to Vista will be the main growth driver, Lanzalotto said.
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The company says its revenue is stabilizing. If so, a value stock is in the making.
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A look back at the telltale signs of one company's meteoric rise.
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This global IT services provider is seeing more growth as its sector makes a comeback.
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A set of blogging predictions from Gartner, a research firm that tracks all things technological, is making waves inside and outside the blogosphere. In its latest report, Gartner predicted that blogging -- the most loved, feared, and hyped Web trend since the emergence of e-mail -- will level off in 2007, leaving its startling growth rates behind.
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There are few business predictions I'd make with cast-iron guarantees, but this one qualifies: The amount of information and content bouncing around the Internet will grow dramatically in the future.
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Company enhances online service for moving business information between corporations.
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The company sees a huge increase in sales, but can it last?
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Deals are sprouting everywhere. One for the electronic trader might be on tap.