Posted by: Rob Hof on January 19, 2006
Just finished a story on tech stocks, not something I usually track closely across the board. (Hoping that won’t be too painfully obvious, but I’m sure you’ll let me know.) After looking into a bunch of companies’ results from Intel to eBay, I got the distinct impression that the underlying business isn’t nearly as bad as the stock swoons, at Intel and Yahoo! in particular, make it appear. Honestly, I think a lot of companies are just being cautious in their forecasts—maybe even a little more than usual.
I’m not entirely sure why. The economy’s doing OK, so it’s not as if things are much less predictable than before. Maybe analysts have gotten used to some companies, like eBay, that routinely outperform their conservative estimates. Maybe investors have been getting greedy, buying on momentum (Google! Google! Google!) instead of fundamentals. I don’t know, but I can’t help but think the correction was bound to come sooner or later. In some cases, I’m just surprised it didn’t happen earlier.