Dolmen Butler Briscoe is upbeat about the prospects for the technology sector, identifying Nortel Networks, Trintech and Bookham Technology as representing good value for investors.
The broker notes that many stocks in the hardware sector have been recently weak, affected by profit warnings from Intel, Apple and Dell.
It states that many companies in the semiconductor equipment sector are likely to meet expectations and in some cases may even exceed estimates. Many of the large semiconductor companies, such as Sony, Hitachi and NEC have announced that they intend to build additional manufacturing plants next year but, on the downside, many electronics companies are reporting a shortage of electronic components which may have a negative impact on companies in this sector.
This is particularly damaging to the personal computer business where component shortage and component price increases have an adverse effect on earnings. This has been reflected by the poor performance of companies such as Dell, Gateway and Compaq. In the software sector, Microsoft, which is the bellwether of the software industry, continues to be affected by the court case with the Department of Justice while many of the dot.com companies have fallen by the wayside as they have tried unsuccessfully to exploit existing retail avenues by leveraging the power of the Internet as a sales channel.
Irish software companies in general have traded sideways in the past few months. Dolmen Butler Briscoe is advising investors to buy Nortel Networks, the Canadian-based group which designs, develops and manufactures telecommunications and data networking equipment. Its optical networking is a key driver behind its revenue growth and should continue to be the main driver as the rate of growth of data transmission increases daily, according to the brokers. at $60.75 it believes the share represent good value.
Trintech also receives a buy recommendation. It is a global supplier of secure end-to-end payment systems for both physical and online businesses.
