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Wall Street Beat: Confidence in tech sector high despite mixed earnings

Marc Ferranti | Feb. 17, 2014
Despite some shadows cast by Lenovo and Cisco earnings, IT stocks have had a strong week overall, with Nasdaq tech stocks reaching their highest point since the third quarter of 2000, during the dot-com bust.

Global production of connected equipment will total 6.18 billion units in 2014, an increase of 6 percent year over year, IHS said. "This will be the largest increase for the market in four years, surpassed only by the 10 percent hike in production during 2010, a year after the global economic recession ended," according to the report.

Reports from IDC and Gartner this week highlighted the growth of smartphones. Global smartphone sales totaled 968 million units in 2013, an increase of 42.3 percent year over year, according to Gartner. Sales of smartphones accounted for 53.6 percent of overall mobile phone sales in 2013, and exceeded annual sales of so-called feature phones for the first time, Gartner added.

On its part, IDC said smartphone sales jumped 39 percent last year to more than 1 billion handsets.

Despite some mixed earnings results over the last month, there appears to be an underlying sense of confidence in the tech sector. Sixty-seven percent of tech company CFOs surveyed recently by professional services firm BDO said they expect increased sales in 2014. That is a 15.5 percent increase from the number of respondents expressing similar sentiment in last year's poll, BDO said.

This optimism about sales appears to translate into optimism about strength in share prices.

Forty-six percent of the respondents to the BDO survey said they expect technology business valuations to rise.

"Last year was a very robust year," said Aftab Jamil, a BDO partner and leader of the Technology and Life Sciences practice. "Nintey-seven percent of the CFOs [surveyed] said they think business valuations would be at least as good if not better than last year," Jamil pointed out. "Only 3 percent said they expect valuations to decline -- that's phenomenal."

Cloud computing and wearable tech will be among the hot product categories this year, Jamil said.

The Nasdaq Computer Index closed Friday at 2,088.90, up by 2.54 points, its highest point since October 2000. The Nasdaq Composite closed at 4,244.03 up by 3.35 points.


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