CHICAGO, April 14 (Reuters) – A resounding shot across the
bow has been fired at the tech sector in recent weeks. The
tech-heavy Nasdaq Composite Index is down nearly 5 percent in
April through Friday’s close and the Nasdaq Biotechnology Index
is off 21 percent from its record closing high on Feb. 25. Many
of the sector’s flagships and newcomers have been in the
The latest tech stock falterings could be a sign of trouble
To get a clearer idea of what’s roiling the tech sector, you
have to look at trends within various parts of it.
One item to look at is data storage, which is offered by
Amazon.com Inc and Google Inc and has been
the object of a price war of late. While falling prices in this
sub-sector are great for customers, they will eat into profits
for competing companies.
Brian Bolan, a portfolio manager and equity strategist for
Zacks Investments in Chicago, surmises that the storage price
war is partially responsible for the delay of initial public
offerings of companies like Dropbox and Boxee.
Tech companies’ valuations, particularly those that are
barely profitable, may be the object of inflated expectations of
future business and earnings because they often engender
irrational exuberance. Witness the dot-com bubble of more than a