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SPRING 2003

INVESTING FOR GROWTH

Fred Hickey: Playing the Upticks in Tech


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Fred Hickey, editor of the influential High-Tech Strategist newsletter, toils far from Wall Street, in Nashua, N.H. That distance, plus an enviable Rolodex amassed over 20 years in techdom, enables the fiercely independent analyst to keep tabs on the industry without getting caught up in the hype. Toward the end of the boom, for instance, Hickey told anyone who would listen that the insanity wouldn't last. (The High-Tech Strategist costs $120 a year and is available at P.O. Box 3133, Nashua, N.H., 03061.)


Even now, with Nasdaq stocks down 70% from their peak, Hickey remains a grizzly. That's because, he says, investors are clinging to and overpaying for 1990s tech leaders such as Dell (DELL ), Intel (INTC ), Oracle (ORCL ), and Applied Materials (AMAT ). Recently, these goliaths traded at price-earnings ratios of 30 to 80. Hickey believes the sector won't bottom out until these companies approach the p-e's of 16 reached in the 1990 bear market. To him, that means the Nasdaq could drop 50% more before the bears retreat.

In the meantime, Hickey advises readers to play the bear market rallies. In October, for instance, he bought software makers Legato Systems (LGTO ) and Network Associates (NET ) and doubled his money when he sold them three months later. When the next rally gets going, Hickey says, investors could profit by buying shares in two cash-rich, debt-lean companies: Lawson Software (LWSN ) and 3Com (COMS ).

MARCH 24, 2003




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