Broadview Associates LLC's IT Index of 1,500 technology stocks rose 7 percent in November, with much of the increase due to strong performance by major hardware makers, Broadview officials said today.
However, the increase was less than the 7.57 percent jump in the Standard & Poor's 500 index during the same period, as share value fell for several online content providers and telecommunications service companies, said Charlie Federman, chairman of Broadview, a mergers and acquisitions adviser in Fort Lee, N.J.
Hardware stocks on the Index were up 11.61 percent in November, reaching their highest value in the Index's history, Broadview officials said.
"Market leaders including Intel Corp., Cisco Systems Inc. and 3Com Corp. account for the hardware sector's surge," Federman said. A majority of the 10 companies with the largest market capitalizations in the IT industry are hardware companies, he added.
Software issues were also up, but only slightly at 4.87 percent.
A spate of public offerings in the IT industry over the past few years is now slowing down dramatically, and Broadview's technology IPO Index rose just a quarter of a percent in November.
"In a rush to take advantage of a hot stock market and cheap capital, some IT companies have gone to market prematurely," Federman said. "Their stock offering prices were inflated, and the market has reacted by correcting their prices to reflect their true value."
Broadview currently estimates aggregate market capitalization of IT companies in the United States to be $2.2 trillion, with 27 percent of the total market capitalization held by 10 companies. Over the past two years, aggregate market capitalization in the IT space has risen 56.7 percent, according to Broadview officials.
The company's U.S. IT Index, along with its European IT Index of 430 IT companies, can be found on the Broadview World Wide Web site at www.broadview.com/ in the "Resource Center" area.