SAN FRANCISCO, Nov. 17, 2011
Internet - Colin Sebastian
“During the most recent macro downturn, e-commerce gained market share over bricks-and-mortar retail, and our research suggests that online shopping is viewed by consumers as an attractive and convenient channel to find good values and comparison shop. The Internet is evolving as a fundamental part of the global economy. So despite whatever headwinds we may encounter in 2012, we don’t see those factors significantly impacting a business that is the most dynamic and important consumer platform.”
Wireless Communications - William V. Power, CFA
“Currently, we favor carriers and smartphones over software and infrastructure names. While heightened economic uncertainty could lead to further weaknesses in carriers, overall wireline trends have begun to improve and should be relatively stable in the near- to medium-term. Additionally, the transition to smartphones and tablets is a strong secular theme that we believe should continue to drive Apple and key Android partners, irrespective of market conditions.”
Software - Steven M. Ashley
“Enterprise software spending continues to be robust given that software is typically used to increase productivity and/or cuts costs. We think that trend will continue into 2012 as organizations continue focus on staying lean. In addition, several of our covered software companies have strong secular trends driving growth, including SaaS, desktop virtualization, private and public cloud adoption, next-gen business intelligence, and a new low cost distribution model.”
Semiconductors - Tristan Gerra
“We remain cautious about next year’s first-half outlook given our expectation for continued inventory deleveraging and below-seasonal end-demand, combined with year-over-year declines in gross margin. For the remainder of this year and next year, areas for optimism include smartphones and NAND flash. Secular themes two-years out include Long-Term Evolution communication infrastructure build, computing infrastructure, and ultra-mobile computing appliances.”
IT Systems & Networking - Jayson Noland, CFA
“We expect network security to prove more resilient in an uncertain macroeconomic environment given that security is a more easily defendable portion of the IT budget during a period of constrained spending. Many security vendors also benefit from a significant stream of recurring software license revenue. WAN Optimization is another secular theme that should be fundamentally advantaged in a low-growth IT end market. WAN Optimization is one of the few vendors of IT equipment that should directly benefit from cloud computing, as data and applications move further from users.”
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