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BUSINESS Saturday 17 June 2017
A25

Tech stocks trip away from highs, but few expect bigger drop

materialize.
By MARLEY JAY The stocks have simply ris-
AP Markets Writer en a lot more than the rest
NEW YORK (AP) — Technol- of the market. That can’t
ogy stocks have taken a continue indefinitely with-
stumble over the last week out a break.
after soaring to heights While the possibilities of
they last saw just before the technology companies
dot-com bubble collapsed seemed intoxicating in the
17 years ago. Here’s why late 1990s, today it’s easier
this time might be different. to argue that the stock
Technology companies gains make sense because
are the main reason the the really have changed
stock market has climbed the world. They’ve remade
in recent months. The entertainment, and video
technology index of the game makers Activision
Standard & Poor’s 500 in- Blizzard and Electronic Arts
dex is up 17 percent this are some of the highest-fly-
year, twice as much as the ing technology companies
broader S&P 500. this year.
Last week they got close Design software maker
to the highs they set all the AutoDesk and Salesforce.
way back in March 2000. A conference worker passes a demo booth at Facebook’s annual F8 developer conference, in com have rallied as new
At that time, Mark Zucker- San Jose, Calif. Technology companies are on track to reach all-time highs soon, and Facebook technology has reshaped
berg was in high school, is one of the most valuable companies on the U.S. stock market today. (AP Photo/Noah Berger) business. With so much crit-
the iPod didn’t exist, and ical data now stored in the
few people had any idea deal further. pared to then. After adjust- ing at about 21 times their cloud, cloud computing-
how a company could That might bring up bad ing for inflation, the three earnings, a number that is focused companies like
make money from internet memories of the tech bub- largest technology com- much closer to where S&P Microsoft and Adobe Sys-
searches. ble and its aftermath: the panies of 2000, Microsoft, 500 companies are usually tems have surged. So have
What’s different now? Un- technology index peaked Cisco Systems and Intel, re- valued. numerous chipmakers.
like then, many of the mar- on March 27, 2000, but it ported $113 billion in com- To put it another way, inves- That said, some of the gains
ket’s favorite tech compa- nosedived following nu- bined revenue that year. tors value the technology this year have been stag-
nies are actually making merous high-profile com- Apple alone reported $217 sector at almost $5 trillion gering. Despite their recent
gobs of money. pany failures, the disastrous billion in revenue in 2016. now. After adjustments for losses, Apple is up 23 per-
“The sector is delivering on AOL-Time Warner merger, “We don’t look at this to be inflation, it was worth about cent this year and Face-
a lot of the promises that and the recession and the beginning of the end $6.4 trillion in March 2000. book has jumped 27 per-
investors hoped for during stock market slump that fol- for the sector,” said Terry That’s for a group of com- cent. Alphabet, Google’s
the bubble years,” Jack lowed the September 11th Sandven, chief equity strat- panies that were newer, parent company, has
Ablin, chief investment of- terrorist attacks. By late egist for U.S. Bank Wealth less tested, had far smaller climbed 19 percent. Micro-
ficer for BMO Private Bank. 2002, the tech index had Management. “Conditions profits and fewer sales, and soft has gained 11 percent.
And yet last week, when fallen a staggering 80 per- are good for growth-orient- paid smaller dividends. Those are four of the five
the tech index seemed to cent from its peak. ed companies like tech.” According to numerous ex- most valuable companies
be just minutes away from Few investors expect that Before the 2000 bubble perts, the problem today is on the U.S. stock market
breaking a record, the kind of catastrophe this burst, S&P 500 technology not that technology com- today. The other member
stocks went into a steep time. One reason is that companies were trading at panies are trading on over- of the top five is Amazon,
slump. Some analysts think technology companies are about 68 times their earn- ly rosy growth projections which isn’t classified as a
the stocks will fall a good very profitable now com- ings. Today they are trad- or profits that may never technology company.q
Walmart to acquire online men’s clothing retailer Bonobos

By ANNE D’INNOCENZIO seller Moosejaw as it focus- lennial customers.While
AP Retail Writer es on brands appealing to Walmart keeps trying to
NEW YORK (AP) — younger shoppers. compete against Amazon
Walmart is buying online Bonobos, which started out by pushing harder into on-
men’s clothing retailer selling pants online, caters line, Amazon announced
Bonobos for $310 million to male shoppers looking a bold move into brick-
in cash, showing that its for help putting together a and-mortar stores Friday by
appetite for hip clothing wardrobe.Targeting Bono- saying it would buy Whole
brands shows no sign of bos is a good move for Foods in a deal valued at
abating as it looks for ways Walmart as it tries to com- about $13.7 billion.
to gain on Amazon. pete with Amazon, which The Bonobos deal, an-
It’s a sign of the aggres- has been quickly expand- nounced Friday, is ex-
sive direction Walmart is ing its clothing business, pected to close at the end
taking since buying Jet. says internet consultant of the second quarter or
com last year and keeping Sucharita Mulpuru-Kodal.“If A man walks by the Bonobos Guideshop in New York’s Financial the beginning of the third
that company’s founder as you roll up enough of these District. Walmart says it’s buying online men’s clothing retailer quarter of this fiscal year.
head of its online division. online startups, you cre- Bonobos for $310 million in cash, showing that its appetite for Bonobos CEO and found-
Walmart has since bought ate a meaningful share” of hip clothing brands shows no sign of abating as it looks for ways er Andy Dunn will report
clothing seller ModCloth, business, she said. to gain on Amazon. Bonobos, which started out selling pants to Marc Lore, the CEO of
footwear retailer ShoeBuy. She noted that Walmart online, caters to male shoppers looking for help putting together Walmart’s U.S. online op-
a wardrobe.
com and outdoor gear can learn from these mil- (AP Photo/Bebeto Matthews) erations. q