NEW YORK, Nov 30 (Reuters) - Technology bellwethers like Intel Corp. and Microsoft Corp. have struggled this year, but that doesn't mean money can't be made from technology stocks.
Instead of saying technology is dead because the sector's stars have underperformed, investors should realize there is a new bull market in at least four areas, says Frank Husic, managing partner of Husic Capital Management in San Francisco.
The areas include spending on defense and security, involving companies like Symantec Corp. and VeriSign Inc. , and companies with innovative ways to sell goods and services over the Internet, such as eBay Inc. and Yahoo Inc. , he said.
"One more time, the early rumors of the death of the Internet have proven premature. But the winners have morphed," Husic said in a telephone interview. "The winners are people who are finding innovative ways to sell goods and services, using the existing deployment" of Internet technology.
Husic said two other interesting areas include companies that make use of wireless technology. such as XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. , and a consumer-led technology boom based on products like cell phones, Ipods, PDAs, digital cameras and flat TVs.
"Those are the four areas that we've determined where the technology bull market is at at this point. It's not where it was last time. So people who are looking backward are being faked out by thinking that tech is not coming back," he said.
People who have positioned themselves for that shift are doing extremely well, and the others are languishing, he said.
Large-cap tech stocks like Microsoft, Intel and Cisco Systems Inc. are down for the year, while small- and mid-cap indexes have set highs recently.
Stocks are now on the second leg of a bull market that began after the bottom of October 2002 and a dip in September, he said. The rally is being led by small- and mid-cap companies in sectors such as capital goods and industrials, he said.
Companies involved in steel, chemicals, copper and other metals and kinds of materials for industrial goods now find demand to be quite vibrant after a long period of no growth.
"It's a very interesting world where coal and steel stocks outperform Microsoft and Dell (Inc. ) and Intel and Cisco," he said.
GLOBAL BOOM
Husic said developing countries are pushing demand, as their populations can see how the rich side lives and want that for themselves. At the same time, the export of their productivity is holding down the global pace of inflation while keeping capital cheap.
A weak dollar will help the U.S. trade deficit and U.S. producers, but the American consumer is no longer king.
"It's beginning to bite home how expensive things are abroad," he said. But "it's incredibly positive for American producers, who are now taking back market share in a number of internationally traded goods and services. So that is part of why you have steel companies making new highs, while Wal-Mart (Stores Inc. ) goes nowhere. And we should expect more of the same."
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