Tech Stocks Are Overvalued

I have ranted to you in many previous articles about why I am worried about tech giants like Google. However, I wanted to make an article to let you Do-It-Yourselfers know that I am categorically against tech stocks as a brand. In the following examples, I will walk you through why I think tech stocks are a failing industry. (For the purposes of this article tech stocks are any .com or software company.)

Tech stocks are proving their worthlessness once again as tech giant Oracle announced today that they are laying off 2,000 of their workers. Oracle’s stock was up 12¢ a share the date this article was written (Feb. 9, 2006). It is interesting to note that technology and software stocks have unworthiness as a stock brand, especially for this year.

Microsoft has committed to spend $1 billion on expansion of their headquarters in Redmond, WA. This expansion may be good for the long term but following stagnant sales in many markets and the slow manufacturing of the Xbox 360, I do not think that the Microsoft brand will be going anywhere this year. I would stay away from this stock at least until late 2006 if not 2007.

Wayne Inouye stepped down as CEO of Gateway computers on February 9. This stock will be propped up by decent computer sales but their continual losing out to computer brands like Dell and the renewed Apple, I would be afraid to put too much faith in this once great computer giant.

Vonage which is opening to an Initial Public Offering (IPO) soon will also be overvalued. It has lost $189.6 million in the first nine months of 2005, luckily though they made revenues of $174 million. Meaning that their losses were bigger than their revenues. This company has no future. While they are looking to expand, companies like Cisco are edging into their market and they are likely to fail.