Big Tech Weighs on Nasdaq’s Q1 Gains

by Brad Moon | March 29, 2013 11:58 am

QuarterlyReviewOutlook185 Big Tech Weighs on Nasdaq's Q1 Gains[1]The first quarter of 2013 is behind us, with both the Dow Jones Industrial Average and the S&P 500 closing at record highs, adding more than 10% in the process. And the Nasdaq? Although the tech-heavy index grew, it wasn’t able to manage a double-digit performance, coming in at 3,267.52 for a more modest 8.2% gain on the quarter[2].

So what happened to the technology companies? After all the early-year excitement in the industry — the holiday sales, the Consumer Electronics Show[3], BlackBerry’s (NASDAQ:BBRY[4]) January reboot[5] and all the other positives — why is the tech-heavy index underperforming the blue-chips?

As our own Daniel Putnam points out, blame the mega-caps[6]. There were plenty of Nasdaq success stories in Q1, with a large swath of companies that outperformed not only the Nasdaq average, but the other indices as well. But the Nasdaq is heavily weighted on the performance of tech giants, which didn’t do so well … Apple (NASDAQ:AAPL[7]) being the prime example. Just as the start of Apple’s run in 2012 led to record Nasdaq performance a year ago[8] (the index was up 18.7%, with Apple alone accounting for 34% of that gain), in a quarter where Apple ended down nearly 20% YTD, the sail turns into an anchor and the Nasdaq stumbles.

And this round, it wasn’t just Apple. Here’s a quick look at some of the big names of the quarter — winners and losers alike.

So, as Daniel wrote, it isn’t that technology stocks aren’t performing this quarter — more that big technology companies aren’t doing as well as they could be. Amazon (NASDAQ:AMZN[23]) was up just 3.6%, Facebook (NASDAQ:FB[24]) was down 8.6%, Intel (NASDAQ:INTC[25]) gained 2.2% and Oracle (NASDAQ:ORCL[26]) lost 6.9%. Technology stocks are still hot, but mature tech, it seems, is in a cooling-off phase.

Will that change for Q2? Microsoft is hoping that Windows 8 and Surface tablet sales take off and is goosing its Windows Store[27] in hopes of boosting adoption. Apple is expecting its Mac shipments to normalize now the kinks are ironed out, but iPhone sales will be facing the double jinx of consumers beginning the annual ritual of holding off on purchases in anticipation of a new version and Samsung’s (PINK:SSNLF[28]) new Galaxy S4[29].

When it comes to big-cap performers, it may well be up to Google (NASDAQ:GOOG[30]) — up 9.8% this quarter — to lead the way, but double-digit Nasdaq growth in Q2 may be a little too much to hope for.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Endnotes:
  1. [Image]: http://investorplace.com/hot-topics/quarterly-review-outlook/
  2. coming in at 3,267.52 for a more modest 8.2% gain on the quarter: http://www.cnbc.com/id/100600350
  3. Consumer Electronics Show: http://investorplace.com/2013/01/10-big-picture-takeaways-from-ces-2013/
  4. BBRY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BBRY
  5. January reboot: http://investorplace.com/2013/01/meet-rims-new-blackberry-10-line/
  6. blame the mega-caps: http://investorplace.com/2013/03/sluggish-mega-caps-are-weighing-on-tech/
  7. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  8. led to record Nasdaq performance a year ago: http://investorplace.com/2012/04/sp-500-nasdaq-celebrate-record-breaking-quarters-but-its-all-about-apple-aapl-msft-intc-orcl-goog/
  9. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  10. put a stop to employee work-from-home plans: http://investorplace.com/2013/02/yahoo-ceo-makes-controversial-demand-of-employees/
  11. continuing a rally that started late last year: http://www.marketwatch.com/story/yahoo-stock-rally-may-not-last-2012-11-28
  12. DELL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DELL
  13. soon-to-be-private computer maker: http://investorplace.com/2013/01/why-would-michael-dell-spend-more-dell-money-to-buy-dell/
  14. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  15. profits were still down year-over-year in its latest earnings: http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY13/Q2/default.aspx
  16. $98 million profit yesterday: http://press.blackberry.com/content/dam/rim/press/PDF/Financial/FY2013/Q4_FY2013_Press_Release.pdf
  17. revenue and overall device sales were below expectations: http://www.forbes.com/sites/abrambrown/2013/03/28/blackberrys-98m-q4-profit-surprised-everyone-but-theres-bad-news-too/
  18. QCOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=QCOM
  19. company’s earnings report on Jan. 23 set records: http://www.apple.com/pr/library/2013/01/23Apple-Reports-Record-Results.html
  20. CREE: http://studio-5.financialcontent.com/investplace/quote?Symbol=CREE
  21. a leader in LED lighting technology: http://investorplace.com/2013/03/cree-keeps-leading-way-with-led-lighting/
  22. HD: http://studio-5.financialcontent.com/investplace/quote?Symbol=HD
  23. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  24. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  25. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  26. ORCL: http://studio-5.financialcontent.com/investplace/quote?Symbol=ORCL
  27. goosing its Windows Store: http://investorplace.com/2013/03/microsoft-still-struggling-with-app-shortage/
  28. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  29. new Galaxy S4: http://investorplace.com/2013/03/galaxy-s4-feature-packed-but-stylistically-challenged/
  30. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG

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