Wednesday, July 21, 2010

Green Lining: Will Cloud Conversion drive a new Tech Bubble?

Stayed up too late last night going over the changes between Citrix's 2008 and 2009 Form 10K's and experienced a lightbulb moment.  Given that:
  • Tech is one of the few sectors that the United States still leads,
  • large companies have enormous sums of cash on their balance sheets,
  • near to medium term economic reticence leaves these companies seeking more avenues to streamline,
  • stupid shit like NFLX are finally starting to give up their Nasdaq "leadership" roles,
  • and that The Cloud is an important technology still young in its wide acceptance,
could we not expect the tech sector, to be even more stretched due to reallocation into this last bastion of growth?  While it may seem that widespread recognition has already occurred given the PE's of companies like FNSR, CTXS, JNPR, FFIV, and VMW, their market penetration has only just begun.

As we remain in a buyer's market, smart enterprises, like smart people, will continue invest in themselves,  laying the foundations for future growth, before gambling with uncertainty.  I like tech here but make sure to keep tabs on market share data.  Some segments have begun to get crowded and there will be winners and losers, first though, widespread recognition of the trend must occur after more companies perform handily in this blood bath of a market.