A Hartford research firm that tracks the technology sector is painting a major softening in the industry being driven largely by anticipated poor third quarter earnings that are rarely hitting expectations.
Corbin Perception’s third quarter Technology Sector Sentiment Survey says softening sentiment in tech after a relative strong performance year-to-date and mixed second quarter results are causing concern. Corbin says the sector remains a haven for investors overall, especially in higher growth sectors like software, but creeping macro concerns and more bearish management tone are cause for pause.
But that perception depends on where you are based. North America-based investors expect third quarter results to be better than consensus. Europe-based analysts exhibit a more downbeat view of third quarter performance and management outlooks, as recent setbacks in China, pockets of market saturation and capital expenditure deferrals weigh on sentiment.
There’s also differences in opinion between investing old-line and new-line tech. The report says, “[The market] continues to flock to software, which one investor describes as “eating the world”. As another summed up general views, according to Corbin, “Cloud is dominating, apps are good and legacy is bad.”
“Last quarter we began to see mixed top-line growth while EPS came through as companies focused on cost alignment,” commented Rebecca Corbin, founder and managing partner of Corbin Perception, said in a statement. “Tech has remained a bright spot amid challenging growth elsewhere but over the last few months, we have seen that the sector is not immune to the persistent and increasingly challenging macro environment. Investors will be listening intently as corporate managers describe the effect this will have on enterprise and consumer spending in the coming months and are bracing for a choppy quarter.”
