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Monday, August 07, 2006

Tech Sector Miscellany

By William Trent, CFA of Stock Market Beat

Summary: Durable goods orders are showing a significant slowdown in tech spending for June. The year/year change declined from 9% to less than 7% overall, with large drops in shipments and orders for communications equipment and in shipments of semiconductors.
GDP numbers show that the year/year change in equipment and software spending is stable to slowing. Combined with the durables data, we say the odds favor slowing.

Watch List news:
Dade Behring Holdings Inc. (DADE) said quarterly earnings more than doubled on higher sales of its clinical instruments.

Other news:

The North American rigid PCB (printed circuit board) book-to-bill ratio sat at parity in June at 1.00, while the flexible circuit book-to-bill ratio climbed back to the positive range at 1.01 after a three month dip below parity.

Tech Data (TECD) fell 3% after the computer-products distributor slashed its second-quarter estimates. The company expects to post break-even earnings, excluding items, and sales of $4.94 billion for the July quarter. Previously, Tech Data predicted earnings of 30 cents to 36 cents a share and revenue of $4.95 billion to $5.1 billion. Analysts, on average, had forecast earnings of 33 cents a share and revenue of $5.1 billion. The company said it was hurt by weakness in Europe, the Middle East and Asia.

Lenovo Group, the world’s No. 3 maker of personal computers, said its profit in its fiscal first quarter plunged nearly 90 percent compared with the year-earlier period as it restructured after its purchase of IBM’s PC business.

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