"Street Critique"-David Garrity, Principal at GVA Research
Wednesday, July 22, 2009PAUL KANGAS: Tonight's "Street Critique" guest is seeing strength in the tech sector. He's David Garrity, principal at GVA Research and David welcome back to NBR.
DAVID GARRITY, PRINCIPAL, GVA RESEARCH: Thank you, Paul. Good evening.
KANGAS: Before we get into technology, what's your opinion on the market and the economy in general?
GARRITY: On the market we're over weight equities and we think that the central banks are very supportive in this environment and the equities will be the class that out performs. In terms of the economy, obviously divided opinions as to how strong the recovery is going to be and from that standpoint, we think the market's going to continue to benefit.
KANGAS: So you're a bull at the moment.
GARRITY: Yes, sir.
KANGAS: OK. Now we've seen some big technology names report results this week. How do you feel the sector is doing overall?
GARRITY: Overall, we've seen very strong expense control so even though revenues may not necessarily been as robust as analysts had hoped for, we think that as we start to see the growth unfold from major product cycles in the second half such as Windows 7 from Microsoft, we think that there's nice leverage here for investors to look forward to.
KANGAS: Speaking of Microsoft, it reports results tomorrow. What are you expecting?
GARRITY: We're looking for $0.36 versus $0.46 a year ago, but again the big story for Microsoft is going to be their introduction of Windows second in the second half.
KANGAS: We're been hearing a lot about the Google-Microsoft competition. How do you feel it's playing out?
GARRITY: Microsoft has to move a little bit quicker these days because the competition from Google in 2010 is going to intensify both with Chrome OS as well as with Android, two operating systems that Google has said they'll introduce in the market.
KANGAS: Also tomorrow, Amazon reports results and late today it bought online shoe retailer Zappos for about $850 million. What's your take on that deal?
GARRITY: Amazon certainly has increased the number of products they've been selling through their site. Shoes will make for a very interesting addition in this market, especially if we see consumer incomes rise.
KANGAS: Any other particular names that you like now and why in the tech sector?
GARRITY: Certainly, with respect to tech names, Cisco we think is very much, very well positioned. We're looking at Internet traffic volumes that will be growing fairly rapidly. We see Cisco as attractively valued against this backdrop in smart phones. We think that Research in Motion as opposed to Apple or Palm actually provides a better risk return tradeoff for investors.
KANGAS: CSCO on NASDAQ, CSCO, corrected symbol and here's Research in Motion RIMM, go ahead, David.
GARRITY: Yes and then last but not least, we think Yahoo! (YHOO) as we start to see a recovery developing in display advertising in the second half of the year, looks attractive and then also with regard to Yahoo!, they may eventually have a transaction with Microsoft which will create value for shareholders.
KANGAS: Do you own any of the stocks that we have mentioned here?
GARRITY: Certainly. We own Microsoft as well as Cisco in personally and in our portfolios.
KANGAS: All right. Thank you for sharing your insights, David. GARRITY: Thank you, Paul.
KANGAS: My guest, David Garrity of GVA Research.
