Massive Tech Selloff Is An Exaggeration: Kessler

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April 7 (Bloomberg) -- Scott Kessler, Tech Equity Research Chief at S&P Capital IQ, discusses the outlook for various technology companies and his subsequent investing strategy. He speaks on Bloomberg Television's “Market Makers.” (Source: Bloomberg)

It is not surprising.

More stocks in more speculative areas have been indicative of some excesses.

We are seeing a lot of those being wrong off over the last couple of days.

We do not think it is that unhealthy.

It is somewhat of an exaggeration to suggest there is a massive tech selloff going on.

You look over the last month.

We have seen declines in the market you're the ones in the technology sector are not that much more significant.

Perhaps not yet.

There are an awful lot of momentum players.

What is the risk that this continues?

I think the concerns at this point are just the fed become a little more proactive in some of the actions that could result in higher interest rates?

People were thinking about earning season around the corner and wondering if technology companies are going to be able to deliver not only results but favorable guidance as well.

Let's break this down.

Let's say this is a minor correction.

What tech companies are a buy for you?

There are a number of technology names we like.

We like bellwethers like emc and qualcomm.

We think it makes sense to look at companies that are larger, have bigger balance sheet and are well positioned across a number of different categories.

In the case of qualcomm mobile.

How about things you do not like?

Facebook, for example, sold off almost 20% in the past month but is almost trading at 50 times forward earnings.

Amazon is trading at 165 earnings after dropping 13% in the past month.

We have not recommended amazon or facebook or twitter for some time at this stage.

We have actually had sell recommendations on amazon and twitter within the last couple of weeks.

We have become less negative on some of the names.

Another name is webmd.

We think it is a name that is overvalued.

Another is adobe systems, more of a traditional software company that being valued as an on-demand cloud software company.

We do not see that.

Let's say i am a holder of twitter.

I want to sell out to some of my positions?

We try to call them like we see them.

In the case of twitter, we covered the week after the company became public with a sell opinion.

We have that until a couple of weeks ago at most.

We have a neutral opinion.

We expect which are to perform in line with the s&p 500 over the next 12 months.

It means we're are not positive.

We are not saying sell but we are seeing neutral performance.

Here we are.

The market had a big move on friday.

If you wanted to get investors a prescription, what should they be doing in tech?

The first thing is evaluating what they have and why.

One of the aphorisms we use around here is this notion that when you are in the midst of a market storm you want to be on the bigger boats.

Emc and qualcomm makes sense.

It makes sense to come up with a wish list of names that you are interested in and might want to see certain prices on.

Other names we like, by the way, include symantec and western union.

Strong balance sheets.

Ready substantial dividend as well.

That is an increasing theme in the sector.

Speaking of deep value, what about hewlett-packard or microsoft?

Both stocks up considerably this year and beating the market handedly and both trading at single-digit multiples.

We have hold opinions of both of these stocks.

We did not see the turnaround coming in hp.

We do like intel here.

We have a buy opinion.

We think the are a lot less levered to the pc category then people might think.

That is another example of a name we like.

Another name being hit right now and over the last couple of days is yahoo!

We upgraded that stock around $35 a share.

It is trading below that.

We think there is a lots of potential with the alibaba ipo.

We see potential for reducing value related to a turnaround.

What kind of moves?

Some say alibaba is the only true value at yahoo!

And you take it out of the mix and what do they have?

I do not know if i would lead with that exactly.

I think it is fair to say you are right.

Alibaba has been the driver of that stock train for the last couple of years.

We continue to expect that to be the case.

Also consider that they have a substantial stake in yahoo!

Japan, which is a market leader as well.

Last but not least, we think that people are assuming that yahoo!

In terms of the u.s. business and international reach are going to continue to decline.

That might be the case.

If marissa mayer's is able to stabilize and improve metrics and operations, there is an opportunity.

The company has a tremendous amount of allen's sheet flexibility.

There are a lot of options for yahoo!

At this point.

We need to leave you there.

Do you think marissa mayer has the ability to do that as a ceo?

So far it is really too early to tell.

A lot of people have been penalizing her because we have not seen the turn yet.

She said from the get go that it will take years to turnaround

This text has been automatically generated. It may not be 100% accurate.


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