Tech Firms Provide No Guidance: How Bad Will It Be?

Many technology and Internet companies will make presentations at the annual Goldman Sachs Technology and Internet Conference, to be held this week from Wednesday through Friday in San Francisco.

With two thirds of the first quarter basically behind us, it will be interesting to hear how bad it was, because many of these firms refrained from issuing guidance and those who did, lowered it to the cellar.

Among the big companies, it will be interesting to hear Intel's (Nasdaq: INTC) presentation on Wednesday. In my estimation, what Intel says about sales of computer chips in the quarter will have major ramifications on technology shares, and one must hope that it does not come out again with an early warning, like it did last November regarding the fourth quarter.

Another interesting presentation will be that of SanDisk Corporation (Nasdaq:SNDK) on Thursday, with the main interest being its recent announcements about beginning production based on its new x4 technology.

In general, in the chips and components spheres, Goldman Sachs analysts wrote Monday that inventory levels fell markedly in the fourth quarter, by 11% compared with the third quarter. This trend apparently continued in the first quarter, which, in their opinion, will leave the industry with no excess inventory by the second quarter.

The sharpest fall was in LCD screens, with a 43% drop. Chip makers in Taiwan saw a 34% drop in inventory, and communications components showed a drop of 21%. In the chip sector, Goldman Sachs analysts recommend Marvell Technology Group (Nasdaq: MRVL) and Broadcom (Nasdaq: BRCM).

Published originally by Globes [online], Israel business news - www.globes.co.il

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on SeekingAlpha with full permission.