Fred Hickey called the top of the 1990s technology bubble and has liked gold ever since the bull market got going in the early 2000s. This year, the editor of the High-Tech Strategist, a newsletter, gave the Barron’s Roundtable his “typically astute take on the tech sector’s haves and have nothings”.
He’s not impressed with the sector at all. Semiconductor sales are falling and this “is the worst environment for PC companies in a decade or more”. Smartphone sales growth is slowing and likely government cuts are undermining an already lacklustre enterprise-IT sector.
One stock he does like, however, is EMC (US: EMC). The largest data-storage group in the world is still growing strongly and has gained market share from its competitors. It also owns 79% of VMware, which provides virtualisation and cloud infrastructure technology. VMware “is one of the most exciting tech companies around”.
Apple, on the other hand, looks “risky”. The types of products Apple makes get commoditised and so the group’s margins will shrink. It will also be hard for the group to come up with great new products to sustain margins. The Android market is gaining share, Steve Jobs is no longer there to lead the company, and any move into television will face tough competition. The stock could fall by another $50.
Hickey also likes long-time MoneyWeek favourite Vietnam. Moves to bring inflation under control and privatise state businesses have fuelled optimism. Tech production has shifted from China to Vietnam because the labour force is younger (the average age of the overall population is 28) and costs are lower. Samsung, Hickey notes, has moved 40% of mobile-phone production to the country. He also remains a fan of gold.