Have dot-com stocks gotten ahead of themselves? The answer from most equity analysts is "yes." And that goes for the rest of the tech sector, too -- though to a lesser extent. The Merrill Lynch 100 Technology Index has a forward price-to-earnings ratio of 30, just over the top of its normal range. "It's time for investors to take a breather," says Merrill analyst Zhen-Hong Fan.
We're not facing another tech crash. Many of the industry's stalwarts, such as Microsoft Corp. and Cisco Systems Inc., have p-e ratios in the safe 20s. But watch out for those dot-coms. They're in the high-risk zone. By Steve Hamm