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Conglomerates Buying More Tech Stakes


The non-tech merger influence could help to spur technology leaders to get more aggressive in acquiring smaller competitors.

  • Does Florida's investment pool issues provide even more rate cut fodder? The Montana investment pool is suffering similar issues. How many other states will chime in with similar comments? Did we need any more rate cut fodder? If the Fed is still even thinking that inflation is an issue, then yes, we do.

  • What if the actual losses from subprime issues end up being way lower than current estimates? Thornburg Mortgage's (TMA) comments Friday morning alluded to this. Note: TMA is considering paying dividends again and will decide at its next meeting, though it said credit conditions have tightened again.

  • What percentage of mortgages have actually quit paying and how damaged is the actual cash flow generation from the CDO's going to be? Was E*Trade's (ETFC) sale of its mortgage assets a bottom tick trade? November just finished with the worst monthly return of the year for S&P, down around 4.5%. In 1991 we finished November down a very similar 4.4% but December then followed with over an 11% rally.

  • Activision (ATVI), the latest company in tech land to get bought or have a significant investment was the second tech company to get taken out by a larger non-tech conglomerate. Tektronix (TEK) got acquired by Danaher (DHR) recently. The non-tech merger influence could help to spur technology leaders to get more aggressive in acquiring smaller competitors, lest they face those same competitors with a lot more capital behind them.

  • Additionally, this nascent move by conglomerates buying (or buying stakes) in tech exhibits how larger slower growth companies will be looking to attain growth in earnings, revenue and cash flow trying to find growth.

  • Were "data dependent" the worst words Bernanke ever uttered? Goldman's (GS) call on Tech -- timely or late? Bear Stearns (BSC) looks to be breaking or close to breaking the downtrend line on the dailies. The P&F chart is now mildly positive and I think a move to between $120-130 is underway.

  • Based on the ratio between earnings yield and the 10 year Treasury, Don Hays (in Barron's), states that stocks are undervalued by over 40%. I would not agree with that statement for the whole S&P, buy many sectors are that cheap. I would stress that there are many sub-sectors within technology that are undervalued by an even greater amount. Other sectors in the market are similarly distressed, some deservedly so. Basically, the same bifurcated economic conditions that I spoke of in August/September still exist today.
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Positions in BSC and ETFC.

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