Tech troubles aren't over, Barron's Eric Savitz says. While it would be great to put recent woes behind us, layoffs have become commonplace among tech firms, followed by multiple downward earnings estimate revisions, sometimes accompanied by fresh layoffs. The culprits: waning consumer demand, huge cutbacks in IT spending, tight credit conditions, a strong dollar, and massive corporate cost-cutting.
Market-neutral tech portfolio manager Pip Coburn says he's having no problems coming up with short ideas - in which he tries to focus on sectors which are weak even after factoring out the overall slowdown: "I want ideas where the business model is going to implode anyway," he says.
Coburn is bearish on chip equipment makers as the semiconductor industry hits a wall. Moore's law, which dictates chip speeds will double every 18 months, has collapsed, he says.
Another sector worth shorting: broadcast TV, as watchers abandon scheduled programming and watch video on the web.
More shorts: Lexmark (NYSE:LXK) - faces a trend toward using generic cartridges. Blue Nile (NASDAQ:NILE) - too much competition. Shutterfly (NASDAQ:SFLY) - prices are collapsing. Fairpoint Communications (NASDAQ:FRP) - he doesn't like wireline-centric telcos.
On the long side, he likes Cisco Systems (NASDAQ:CSCO) which will benefit from online video. NICE-Systems (NASDAQ:NICE) - which records phone conversations for call centers, a great play on increased focus on regulation and monitoring. Apple (NASDAQ:AAPL) - iTunes locks users into buying more iPhones.