Tech Funds Rebound on Earnings Surprises
Investors last week shifted money from money market funds and U.S. treasuries to technology stocks as some companies' fourth-quarter earnings beat expectations.
The average technology fund we track gained 2.5% in the five trading days ending Feb. 5, excluding inverse funds that sell short technology and Internet stocks.
Amazon.com (Stock Quote: AMZN), which surged 26.4% in the five trading days, had its best holiday season ever. In the latest quarter, the company increased net income by 8.7% to $225 million from a year earlier on $6.7 billion in sales, up 18%.
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Adding to its sales of digital music and videos, Amazon.com has expanded its offerings to include a library of more than 600 casual games at a sub-$10 price point. The company also will begin collecting payment-processing fees on its Amazon Flexible Payments Service in June.
At 34.4% of assets, Amazon.com is the largest holding of Internet HOLDRs Trust (Stock Quote: HHH), the best-performing technology fund, gaining 11.7% last week. Yahoo! (Stock Quote: YHOO), the fund's second-biggest holding, rose 15.1% after it announced it was shutting its "Briefcase" storage service. eBay (Stock Quote: EBAY), up 7.8% for the period, integrated its payment-processing system with Moneybookers USA.
Ultra Semiconductor ProShares (Stock Quote: USD), the second-best-performing technology mutual fund, up 11.67% on 200% leverage, and Semiconductor UltraSector ProFund (Stock Quote: SMPIX), the sixth-best performer, up 10.49% on 150% leverage, track stocks in the Dow Jones U.S. Semiconductor Index.
Standouts among the holdings include Micron Technology (Stock Quote: MU), up 14%; Nvidia (Stock Quote: NVDA), up 13%; and Texas Instruments (Stock Quote: TXN), up 12.6%. Judicial proceedings in Rambus' (Stock Quote RMBS): patent case were halted as the claims were deemed to be "unenforceable" against Micron.
The third-best-performing fund was the PowerShares NASDAQ Internet Portfolio (Stock Quote: PNQI). Its positions include Art Technology Group (Stock Quote: ARTG), which also beat earnings expectations, popping 28.7% last week. Another holding, Shutterfly (Stock Quote: SFLY), up 24.8%, announced a 10% revenue improvement over the same period. Likewise, Akamai Technologies (Stock Quote: AKAM) added 24.1% on better-than-expected earnings and revenue.
