• BusinessWeek, Tuesday, September 16, 2008 11:02 AM

At the beginning of the credit crisis more than a year ago now, some pundits claimed that tech stocks would be immune to an economic downturn. After all, large techs provide safe harbor from credit derivatives and the soaring price of oil and other commodities. They also tend to have stores of cash, little debt and substantial international businesses that benefit from a weak dollar.

Of course, it hasn't turned out that way. Large techs like Google, HP, and Dell have gotten hammered on the stock market this year. And much of the sell-off has been recent, thanks to the dollar beginning an unexpected rally against the euro in mid-July. In the last two months, Apple is down 19.3%, Dell is down 19%, and Oracle 7.5%. Meanwhile, Yahoo, thanks mostly to the botched Microsoft deal, has fallen 16.5% over the same time period, and Google is down 17% (mostly on fears of a DOJ monopoly probe in online advertising).

BusinessWeek says the suffering may not be over for tech stocks, due to "consolidation and disarray" in financial services, where Lehman Brothers on Monday filed for bankruptcy and Bank of America bought Merrill Lynch for $50 billion. Today could also prove to be the undoing of insurance giant AIG, which last night suffered a debilitating credit-rating downgrade. As a result, financial services firms will no doubt cut back severely on IT spending, fallout which is not yet priced into big tech stocks, BusinessWeek warns.

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