Wall Street Winning Streak ContinuesBy Joseph C. Panettieri | Print
IBM results impress Wall Street; shares in solutions providers are up nearly 10 percent in 2004.
Just when you thought channel stocks were ready for a breather, they continue to climb even higher.
For the week ended Jan. 16, our Ziff Davis Channel Zone Stock Index rose 3.69 percent to 1208.30. The index is up 9.05 percent this year and 20.83 percent since its October 2003 inception.
IBM Corp. extended the index's rally last week when it delivered unexpectedly strong 4Q results. Big Blue's income surged to $2.7 billion from $1.9 billion from the corresponding quarter in 2002. IBM also said it expects 2004 IT sales to increase more than previously expected and the company plans to hire 15,000 people this year. Roughly a third of those hires will occur in the U.S. Shares in IBM rose 4.51 percent on the week.
Other solutions providers enjoyed even better showings. Our index's biggest winners for the week were Avnet Inc. (AVT, +11.73 percent), Digitas Inc. (DTAS, +11.37 percent), Sapient Corp. (SAPE, +10.81 percent), Agilysys Inc. (AGYS, +10.34 percent) and Manhattan Associates Inc. (MANH, +8.79 percent). The five companies didn't announce any major news last week, but investors were willing to bet that IBM's results were part of a broader IT recovery.
Optimists hope forthcoming earnings announcements will extend the rally. Solutions providers preparing quarterly results include:
- Acxiom Corp. (ACXM), Jan. 21
- Wipro Ltd. (WIT), Jan. 21
- Satyam Computer Services Ltd. (SAY), Jan. 22
- Digitas Inc. (DTAS), Jan. 29
- PC Connection Inc. (PCCC), Jan. 29
- Cognizant Technology Solutions Corp. (CTSH), Feb. 10)
In some cases, investors may be overly optimistic. Just ask Accenture Ltd. shareholders. The consulting firm (ACN, - 6.98 percent) was last week's only big decliner in our index. Accenture announced improved earnings and an upbeat forecast for 2004, but Wall Street was expecting an even bolder forecast from the consulting firm.
Accenture partners should keep a close watch on the company's "Connection to eBay" strategy. Throughout much of 2002, Accenture announced plans to manage eBay auction stores for Hewlett-Packard Co. and other technology companies. As recently as December 2003, Forbes.com (http://www.forbes.com/home_asia/newswire/2003/12/01/rtr1165341.html) reported that Accenture's Connection to eBay strategy was firing on all cylinders. However, it appears that Accenture no longer runs a Connection site for HP. I'll share more details in my weekly Contract Watch column, which publishes on Tuesday, Jan. 20.
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.
Affiliated Computer Services Inc.
American Management Systems Inc.
Arrow Electronics Inc.
Cognizant Technology Solutions Corp.
Computer Sciences Corp.
DiamondCluster International Inc.
Electronic Data Systems Corp.
Ingram Micro Inc.
Manchester Technologies Inc.
Manhattan Associates Inc.
MPS Group Inc.
PC Connection Inc.
Perot Systems Corp.
Pomeroy IT Solutions Inc.
Tech Data Corp.
The Titan Corp.