| NEW YORK, April 11
NEW YORK, April 11 The last six weeks have been
terrible for many technology shares, but not for the four
horsemen that sat atop the last tech boom.
Intel, Oracle, Microsoft and Cisco, known as the four
horsemen during the late 1990s technology boom due to their
strong performance and leading market share, have all rallied
since the beginning of March even as many other tech companies'
stocks have been crushed.
These legacy tech names have emerged as an alternative for
those who want exposure to the sector, but are spooked by the
slump in high-growth stocks like Netflix.
These old tech names have recently attracted more attention
because their growth outpaces the broader market but they don't
have the high valuations of the one-time momentum favorites.
"They have high cash levels, nice profit margins, and when
the economy returns, their cyclicality will be a positive,"
Robert Stimpson, portfolio manager at Oak Associates Ltd in
"That they're trading at a discount makes them something of
a defensive play," he added. "I'd rather own them than something
like utilities, which pay a dividend but offer little or no
GO WITH THE FLOW
It can be seen in fund flow figures. The First Trust Dow
Jones Internet ETF has seen outflows of $43.86 million
since the beginning of March, while the First Trust Nasdaq 100
Technology fund - which counts Facebook as a
holding but holds few other "momentum" names - has seen inflows
of $9.4 million over that same period, according to data from
While the likes of Netflix and TripAdvisor have lost more
than 20 percent, putting them in bear market territory, Dow
components Intel Corp and Cisco Systems are up
5.7 percent and 3 percent, respectively, since the beginning of
March. Microsoft Corp is up 2.3 percent over that time
and is trading near its highest levels since the dot-com bubble.
These stocks are also considered undervalued by various
measures, including StarMine's measurement of intrinsic value,
which looks at anticipated growth over the next decade. Many of
the high-flyers still look pricey, meanwhile.
Both Netflix and Facebook would still be above StarMine's
intrinsic value measure even if their shares fell 50 percent.
However, IBM is almost 40 percent under its intrinsic
value, based on its Friday closing price, while Microsoft and
Oracle are more than 20 percent under.
Straddling the line between growth and value is Apple Inc
, Wall Street's biggest tech company. While the stock is
trading well under its intrinsic value, it also remains well
below record levels hit in 2012, suggesting investors remain
skeptical that its shares have the ability to recover. The stock
has slipped 1.3 percent since the start of March,
underperforming other legacy names but far better than the
Nasdaq's 7.2 percent drop over the period.
Mark Yusko, chief investment officer of Morgan Creek Capital
Management in Chapel Hill, North Carolina, said the iPhone maker
was an "in-betweener" stock.
"It has growth, but not as much growth as other tech names,
while also not trading at the multiples of others," said Yusko,
who oversees about $4 billion in assets and whose firm owns
Apple. "It has the best of both worlds, and also the worst of
(Editing by Jan Paschal)