The money quote from Goldman analysts states they have become "incrementally more cautious on tech fundamentals given the current macroeconomic backdrop."
Additionally, "with software a typically back-end loaded sale, if
there is any concern on budgets in the early part of 2008, we would
expect CIOs to hold off their purchases until later in the year."
The main area of concern: "Companies with large enterprise exposure and significant dependence on the U.S. consumer."
I have long advocated deciding on an exit strategy prior to owning a
stock. While these downgrades may not mean immediately selling them, at
the very least you should be revisiting your pre-planned exits. If you
are unsure about selling, your trailing stop losses should give you
some protection in the event of a selloff. If you are not using
trailing stops, then you may want to tighten up your existing stops –
especially on those names that have enjoyed a good run.
What follows is a list of stocks affected by estimate cuts and/or price target changes by sector.
Advanced Micro Devices (AMD)
International Rectifier (IRF)
National Semi (NSM)
Texas Instruments (TXN)
Directed Electronics (DEIX)
Network Appliance (NTAP)
Sun Microsystems (Java)
Goldman previously made similar moves this week in Software:
Computer Associates (CA)
Check Point (CHKP)
Quest Software (QSFT)
Red Hat (RHAT)
Secure Computing (SCUR)
Payment processing companies:
Global Cash Access (GCA)
Global Payments (GPN)
Master Card (MA)
CSG Systems (CSGS)
Bearing Point (BE)
Affiliated Computer Services (ACS)
Computer Sciences (CSC)
Let me reiterate this: A downgrade on this many stocks is worth noting, but does not mean the world is ending. Experienced traders know to have a plan in effect, to follow their discipline, and to not get panicked into doing something foolish — on the long or short side.
Goldman Turns Wary On Tech Sector; Cuts Estimates, Targets For Dozens Of Stocks
Tech Trader Daily, November 30, 2007, 4:25 pm
Goldman Turns Cautious On Software, Citing Macro Factors; Cuts Ests
Tech Trader Daily, November 27, 2007, 9:41 am
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