Investors are opting out of many smaller and larger technology names in case this slowing becomes a true double-dip recession. Despite the selling that has already been seen and despite what had been a positive trade tape, we are seeing many smaller and larger technology names putting in new 52-week lows today. The ongoing reports of slower demand, sluggish sales, elevated inventories, cautious or weak economic data, and more have brought on an exit away from more speculative growth names in favor of a defensive investment climate. We are tracking Arris Group Inc. (NASDAQ: ARRS), Art Technology Group, Inc. (NASDAQ: ARTG), ATMI Inc. (NASDAQ: ATMI), Computer Sciences Corporation (NYSE: CSC), FormFactor, Inc. (NASDAQ: FORM), Harris & Harris Group, Inc. (NASDAQ: TINY), Hewlett-Packard Company (NYSE: HPQ), Local.Com Corporation (NASDAQ: LOCM), Plexus Corp. (NASDAQ: PLXS), Power Integrations, Inc. (NASDAQ: POWI), and Premiere Global Services, Inc. (NYSE: PGI) as these have all either touched their 52-week lows or have put in new 52-week lows this Monday. We have outlined each with added color, trading data, and any relevant news as to what the prospects are.
Arris Group Inc. (NASDAQ: ARRS) still has a $1 billion market cap, but this name has been brutally punished over the last month from $12.00 to under $8.50 this morning. The $8.41 low of the trading day barely broke under the 52-week low as the range had been $8.42 to $13.75. Avondale cut its rating on Friday a few weeks after it missed earnings and guided lower for quarter ahead. As it makes equipment for the broadband communications sector, investors have other companies with more solid predictability to choose from.
Art Technology Group, Inc. (NASDAQ: ARTG) has nothing to do with art but does offer a range of e-commerce software solutions and it is now very close to being worth under $500 million in market cap. If that occurs, some holders may have to liquidate shares or lighten up on shares and some others may no longer be able to keep the company in their investable universe. With shares hitting $3.18, that touches the same 52-week low as the range is $3.18 to $4.88.
ATMI Inc. (NASDAQ: ATMI) is in the high-performance materials business to developers in chips, flat-panel makers, and life science sectors. Despite having beat earnings a month ago, the low of $12.77 today went under the prior 52-week trading range was $12.88 to $22.05. Despite estimates having been trimmed, growth is still currently projected for 2010 and 2011.
Computer Sciences Corporation (NYSE: CSC) was in a broader 52-week grouping on Friday, so this IT and business processing outsourcing giant is a repeat offender on the 52-week low list. Friday wasn’t its first 52-week low in a while either.
FormFactor, Inc. (NASDAQ: FORM) is into semiconductor wafer probe card products and its $422 million market cap is not insulating it from the recent slowing of the chip and PC cycle. The $8.34 trading range this morning broke under the prior 52-week range of $8.45 to $26.08. This one loses money now and is expected to keep losing money from operations.
Harris & Harris Group, Inc. (NASDAQ: TINY) is one without any fresh news, but as things are becoming more cautious in general investors are not really wanting to endorse a venture capital or incubation company involved in nanotechnology and smaller technology despite the upside potentiality that could exist down the road. With a low of $3.73 today, its prior 52-week range was $3.80 to $6.75. The company recently gave a net asset value for itself of $4.51, so this is now at a 17% discount to its NAV if you care about such metrics. It is also now under the 4.25 million shares secondary offering of late 2009 at $4.75 per share. Unfortunately, it was also unsure on the IPO market and said it did not need as large of a Silicon Valley presence earlier this year.
Hewlett-Packard Company (NYSE: HPQ) hit $38.61 and is a repeat offender on the 52-week low list after breaking under the old range of $39.33 to $54.75. Its $91 billion market cap should have the even higher priced 3PAR deal over Dell be nothing more than a line-item. Unfortunately, investors are still treating the Mark Hurd fiasco as an excuse to keep selling at a time when many of the general spending trends are weakening.
Local.Com Corporation (NASDAQ: LOCM) is generally too small to note, however it is one of the companies that if it ever gets cheap enough is one we think could be acquired. It is also more of an internet play than a pure technology play. With more of the larger players focusing on more and more local search, Local.com finds itself in an attractive position even if ad rates may not be what they were before. Its low of $3.56 this morning went under the old 52-week trading range of $3.61 to $8.85.
Plexus Corp. (NASDAQ: PLXS) is a contract manufacturer for OEMs and other technology companies. The company recently lost a little over a week of production from a fire at a Romanian facility this month. The drop to $30.00 this morning has seen some recovery but the shares are still well under the $23.80 to $39.66 prior range.
Power Integrations, Inc. (NASDAQ: POWI) makes high-voltage and analog integrated circuits for energy-efficient power conversion. Even if the economy slows further, with an $820 million market cap it always could fall into that category of companies still attractive to a larger buyer. Growth is still expected here in 2010 and 2011 in both revenues and earnings, and it is now close to an at-market multiple of earnings. The low of $29.36 took out the lows of its prior range of $29.79 to $46.30 over the last year.
Premiere Global Services, Inc. (NYSE: PGI) is another surprise to see hitting 52-week lows. The communications player is still often classified wrongly by many investors despite its changes in recent years and we still continue to think of it as an attractive roll-up candidate in the ongoing consolidation phase of tech and communications. Shares have recovered off the low of $5.33 today, but that took out the old 52-week range of $5.35 to $10.64.
There are just about always new stocks hitting 52-week lows despite what the broad tape indicates on any given day. When you see many names in related sectors hitting 52-week lows, it becomes impossible to not recognize a trend. Many of these companies are reaching levels that the valuation is becoming very attractive. Unfortunately, technology buyers generally like to buy growth over attractive valuations. There is also that ongoing belief that companies hitting 52-week lows are doomed to keep hitting 52-week lows.
You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.
JON C. OGG