Standard & Poors analysts take a stab at predicting the new year for tech stocks, traditionally one of the most unpredictable sectors for investors.
Market positions shift
rapidly. For example, eBay and Yahoo's fortunes in 2005 and 2006 were markedly different. With each passing year, tech giants roll out new products and services, and to a certain extent, their stock
prices are dependant on how those play with consumers.
The tech sector has underperformed the S&P 500 Index since 2003, but there was a notable rebound in mid-2006, which should
(could) last in 2007. Video games should rebound, especially for publishers like EA, Activision and Take Two Interactive, which will enjoy sales from the last days of the PlayStation 2, GameCube and
Xbox, and new sales from the new consoles: the PS3, Xbox 360, and Nintendo Wii.
S&P is neutral on the sector, though Nintendo will likely fare best, spurred by the early success of the Wii and the continued success of the GameBoy and the DS. Sony loses money on each PS3 sold, so it has a long uphill road to profitability, which will come from software sales.
It was a bad year in the Internet media market for just about everyone but Google. Yahoo had a terrible year, as did eBay and Vonage. S&P pegs eBay as its only strongly ranked "buy." It expects Priceline to be bought by a bigger competitor, and it pegs CNET Networks and VeriSign as a strong "sell." It offered no opinion on Yahoo, Google or other Internet bellwethers.