Technology integrator and distributor shares rise on Wall Street amid strong economic report; earnings season begins later this month for IT solutions providers.An improving job market and lucrative IT contracts last week gave our Ziff Davis Channel Zone Stock Index its biggest lift in more than two months.
For the week ended April 2, our index rose a healthy 5.71 percent, easily outpacing the Dow (+2.5 percent), the S&P 500 (+3 percent) and the Nasdaq (+4.9 percent) during the five-day period. Of our 30 index members, winners last week easily outpaced losers, 26 to 3, with shares in one index member unchanged.
Our index's biggest one-week winners were Acxiom Corp. (ACXM, +18.22 percent), DiamondCluster International Inc. (DTPI, +13.71 percent), Arrow Electronics Inc. (ARW, +10.97 percent), MPS Group Inc. (MPS, +10.42) and Affiliated Computer Services Inc. (ACS, +9.78 percent). Much of the gains occurred when the Labor Department last week said employers added more than 300,000 new jobs in March—or more than twice as many jobs as economists had forecast.
Ironically, targeted job cuts also fueled portions of our index's rally. Acxiom, for one, announced that it recently shed 230 positions, or roughly 5.4 percent of its U.S. workforce. Yet Acxiom shares hit a new 52-week high on April 2, shortly after the outsourcing specialist said its fiscal year ended March 31 resulted in a strong financial performance—though actual results won't be disclosed until May 12, according to Yahoo Finance.
Next page: Other highs
Meanwhile, Affiliated Computer Services (ACS) shares also neared a 52-week high as the company announced a seven-year contract to manage McDonald's Corp.'s IT infrastructure. Under terms of the agreement, ACS will oversee the fast foot giant's mainframe, enterprise servers and help-desk support for more than 6,000 desktops. Terms of the contract were not disclosed. ACS is slated to announce quarterly results on April 20.
Plenty of other earnings reports are on tap for the next few weeks. Watch for Keane Inc. (KEA, +6.72 percent) to deliver quarterly results on April 28 and Digitas Inc. (DTAS, + 4.19 percent) to hold its shareholder meeting on May 13.
Meanwhile, shareholders continue to closely watch Titan Corp. (TTN, -0.79 percent), the solution provider that faces scrutiny from the SEC and the Department of Justice. The Feds are investigating whether Titan consultants made improper payments to foreign officials. Titan shareholders are scheduled on April 12 to meet and vote on Lockheed Martin Corp.'s proposed takeover of the company. There's a chance that the vote will be delayed until the SEC and Justice Department investigations are wrapped up.
For the record, I don't own shares in Titan or any member of our stock index.
Next page: How all 30 stock in our index performed
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About this Column: The Ziff Davis Channel Zone Stock Index tracks 30 channel-related stocks on a weekly basis. We don't recommend buys, sells or holds. Rather, the index seeks to measure the channel's financial health. We launched the index on Oct. 24, 2003 with a value of 1000. Each stock in the index is equally weighted. For example, if one stock rises 5 percent and another falls 4 percent, the net result is a 1 percent gain.
Joseph C. Panettieri has covered Silicon Valley since 1992. He is editorial director of the New York Institute of Technology . Write to him at joe_pan5@yahoo.com.
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