Good news from an article in the Washington Post Sunday titled, Bubble or Bounce, Tech is Soaring by Jonathan Starkey. According to Starkey, tech stocks are hot, the Nasdaq composite index is up 26.8 percent for the year, and several other key financial indicators are trending in a positive direction. Great.
Add to that, several bellwether companies are reporting strong sales. Apple’s iPhone and Research in Motion’s (RIMs) Blackberry sales have grown more than 80 percent this year despite the recession and weak consumer spending. Even better.
Starkey goes on to report that for Cisco, the world’s largest infrastructure vendor and a competitor to many of our clients, shares have risen 31 percent since the beginning of the year but the company’s 4Q profits are down 46 percent. Despite mixed results, CEO John Chambers was quoted as saying, "if we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business in the fourth quarter.” Fantastic. Companies are beginning to loosen up the purse strings again, so what’s the problem?
I’m not convinced there is one. However, Chambers has been catching a lot of flack lately for “questionable management practices” and purported market share declines against rivals HP and 3Com. When you’re at the top of the heap, there’s always going to be folks chipping away at you. Cisco is no innocent victim. We all know that. But Chambers is very smart and the driving force behind one of the most successful technology company’s in history, so can’t we just enjoy his optimism for a moment and hope he’s right?
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