High-Tech Stocks Gain New Admirers for Intrinsic `Value'
Chet Currier, Ap, THE JOURNAL RECORD
While stocks in general have been enjoying a vigorous bull market, investors in most technology issues over the past couple of years have experienced results ranging from disappointing to disastrous.
Companies in the computer, communications and electronics industries were leading participants in the early stages of the bull market, from the summer of 1982 through the first half of 1983. Over the long span since then, many of them have lagged badly.
It is accepted as fact in the financial world that enthusiasm over high technology ran to excess in the boom days. Now, some analysts argue that negativism and neglect have carried the stocks to the opposite extreme.
""Technology, whether it is information- or capital-based, is still and will remain the engine for productivity growth,'' says Stephen Leeb, editor of the Jersey City, N.J., advisory letter Investment Strategist, who maintains that some quality technology stocks today are ""begging to be bought.
""It seems extremely likely that some of yesterday's fallen heroes will rise again,'' he declares.
In the view of Richard Rippe, economist at Dean Witter Reynolds Inc., ""the best news for manufacturers of computers, communications equipment, instruments and photocop and related equipment is that the long-run basis for a record of superior growth remains intact: Product prices continue to decline relative to other goods and services.
""As long as this trend persists, demand will expand at above-average rates.''
No one disputes that there have been some very compelling reasons for the stocks' fall from favor. At the simplest level, earnings in the industry have fallen far short of the hopes held out a few years ago.
""Part of the problem,'' says Rippe, ""is overly optimistic expectations. In the first six quarters of this business expansion, expenditures (for computers and other high-technology items) grew at an astronomical rate that was unsustainable. …