Landis & Van Wagoner: Future Tech
05/23/2003 12:00 am EST
Garrett Van Wagoner is president and CEO of the Van Wagoner funds and has a four member team that provides research and management for the five funds currently operated under the Van Wagoner title. Kevin Landis is head of one of the leading technology asset management firms in the country. He is the founder and chief investment officer for the Firsthand Funds, including managing three of the Firsthand Family's Funds. Van Wagoner and Landis were among the speakers at a special panel called "The Future of Technology Investing."
"We just can’t imagine a worse environment than the one we have been through," says Garrett Van Wagoner . "But I think it’s getting better. The greatest untold story is the incredible amount of restructuring that has gone on. In many tech companies break-even levels have been slashed. If we do get an uptick in the economy going forward, then a little bit of revenue growth, then the profitability of these companies will really come shining through. I think part of the reason these stocks are starting to respond is the anticipation that the economy is getting better. The theme across corporate America is cutting their break-even levels and reducing costs. When we do get some revenue growth I think the profitability is going to be much stronger than expected. The following stocks are among the largest holdings in our emerging growth fund."
"Embarcadero (EMBT NASDAQ) has long been one of our favorite companies. They do database administration software. Their results have been relatively stable, yet the stock is down a lot. They have been able to generate cash and profits throughout the downturn. They have very conservative management."
"Sonus Networks (SONS NASDAQ) is another telecommunications company. Analysts on Wall Street have doubled their revenue estimates on this company for the year, so it looks like things are back on track. Basically, their products allow you to put voice over data networks."
"Kana Software (KANA NASDAQ) is another enterprise software company that is doing very well. Their results have turned up in the last quarter. Their software is mainly used in call centers to automate the centers and allow support people to answer questions or take orders."
"We like to be long-term, buy and hold investors," says Kevin Landis. "Here are our top picks for long-term investors:
UTStarcom (UTSI NASDAQ) is a telecommunications equipment company, but their biggest product is for wireless connectivity – wireless local loop. Their biggest market today is China and they are just moving into India. Between China and India, that covers about half the people on the planet. About one in ten persons in China has access to dial tone and 2% to 3% in India have basic connectivity. In our mind, UT Starcom is in the right place at the right time."
"Our number two pick is Magma Design Automation (LAVA NASDAQ). They make design automation software. That’s the software that chip designers use to make chips. It is a really tough technology to make complex chips. Both Magma and UTStarcom have backlogs, which will allow them to make their revenue projections for the year."
"Another company that is growing like a weed is Lexar Media (LEXR NASDAQ). They are involved in flash memories; they allow other foundries to make the flash memories in the Far East and then they make the little controller chip that makes it work. That gives you the electronic film in your camera or gives you a drive to plug into your PC or any of a number of portable storage features. Overall, it’s a great digital photo play."
"Our fourth pick is Symantec (SYMC NASDAQ). We think Symantec is going to be the emerging gorilla in security software. A few years ago, if you looked at security software it just looked like anti-virus software. But security is much more important these days and focuses on things such as intrusion detection and other sophisticated applications. We think this is an emerging blue chip."
"The last company is Business Objects (BOBJ NASDAQ), which makes business intelligence software. People have all this great technology, but what are they going to do with it? This company helps tie all the enterprise information together. The field is known as business analytics. And this company is one of the leaders in that area."