Technology stocks are suffering a bad year as hopes of a capital spending upturn fade. In the second quarter, 39 of 72 technology firms in the S&P 500 cut earnings estimates, says Jon Markman of MSNmoney.com. Most recently, SAP, Lucent and EMC have added to the gloom, missing earnings forecasts and contributing to the latest slide in markets.
It's usual for both hardware and software companies to suffer a slowdown before business heats up in the second half, says Sarah Lacy of BusinessWeek. But this year's decline has been exacerbated by $77/barrel oil, which could scupper any bounce. And consumer demand which has acted as technology's saviour before also shows signs of strain. Flat screen TV producer LG Philips LCD reported second-quarter sales similar to last year's, despite the supposed World Cup boost. And consumers are unlikely to upgrade their PCs this autumn, given the delay in Microsoft's new operating system, says Robert Cyran of Breakingviews.com.
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