Trading on days leading up to Federal Open Market Committee (FOMC) meetings is often circumspect because investors want to get a sense of where interest rates may be headed in future before playing the market. Although the Dow manages to close a tad higher, today is no exception to the cautious approach by investors. The S&P is really missing in action and Nasdaq suffers from no leadership today.
I think what tech stocks need right now is a spark from MSFT, which reports fiscal year 2007 first quarter results on Thursday. The movers and shakers of the tech sector need MSFT to get Vista and Office 2007 out not now, but right now. PC makers need the software because many consumers don’t want to buy a PC and then shed blood to upgrade software - today’s announcement to offer coupons to PC makers goes some way to allay such fears. Other software makers want to see Vista so they can build software to complement it or compete with it.
The broader tech sector also holds its breadth as many consumers that have to decide between that Plasma TV, for instance, and a new computer adopt a wait-and-see attitude before. If I had planned this holiday season to make a big purchase of electronic gadgets or even a top-of-the-line mobile device, I will not make any moves until I know what it will cost to upgrade to Vista. I’m sure there are many people out there who think like me.
So, all eyes are on MSFT right now. Over the past few days even the stock can’t seem to get any traction. The earnings guidance that MSFT will provide on Thursday for Q2 and the rest of FY2007 may light a bit of fire under the stock but the energy the stock really needs will come when Vista starts to ship in November.
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