Tech Investor: Predictions for 2002

Predictions for 2002

December 27, 2001: 2:05 p.m. ET

Each year at this time, I take a stab at guessing what awaits us in the new year.
By Adam Lashinsky

SAN FRANCISCO (CNN/Money) - After an awful 2000, many tech-stock investors thought for sure 2001 couldn't be worse. Technically, they were right. As of Dec 26, the Nasdaq composite index was down only 20 percent, compared with the 39 percent swoon the previous year.

But the news was grim again, as the collapse of the telecommunications sector, the Sept. 11 tragedy, a war, the fall of Enron and other calamities all weighed down an already ailing technology industry.

And for 2002? Each year I take a light-hearted stab at predicting what the coming year holds. When I tried this exercise last year for TheStreet.com, I did alright, calling that neither Merrill Lynch's Henry Blodget nor Yahoo's Tim Koogle would keep their jobs for all of 2001, and that shares of Microsoft would outpace AOL, Intel, Cisco and Sun. Unfortunately, I blew the big macro call, predicting that the Nasdaq would gain 8 percent in 2001.

But enough of the past: Let's get on with my predictions for Y2K plus two.

1. The Nasdaq composite will:
a) End the year flat. (A hollow victory, but a victory nonetheless.)
b) Rise 15 percent. (Investors find value in fallen techs, and no more shoes drop in telecom.)
c) Rise 40 percent. (The recovery is real. Happy days are here again.)
d) Fall 5 percent. (The third straight year of losses completes the elimination of buy-the-dips investors.)
e) Stop including technology stocks.

2. The best performing big tech-stock of 2002 will be:
a) Microsoft. (Just pick this stock every year and you'll be in good shape.)
b) JDS Uniphase. (It looks like that acquisition strategy works after all.)
c) Cisco Systems. (With billions of dollars in the bank, Cisco steals more market share from its lesser rivals, and proves it's got staying power.)
d) Intel. (Easy comparisons over 2001 will make the stock shine.)
e) Enron. (Well, it's not big anymore, and it's not a tech stock anymore either, but it's also starting from a very low base.)

3. Hewlett-Packard's merger with Compaq:
a) Will collapse as soon as H-P announces it is missing its January quarter.
b) Will be voted down by shareholders, after a long, bitter fight.
c) Will be approved, but only after Walter Hewlett agrees to become CEO of the company.
d) Will be approved by shareholders in a squeaker of a vote. Then the hard work begins.
e) Will be abandoned when Institutional Shareholder Services votes against it and the companies realize their quixotic quest is hopeless.

4. The tech-industry CEO least likely to remain in his/her job will be:
a) Microsoft's Steve Ballmer. (He'll hang it up and turn to his true calling: acting in a TV sitcom.)
b) Hewlett-Packard's Carly Fiorina. (Regardless of which way the merger with Compaq goes, Carly is toast.)
c) Yahoo's Terry Semel. (He's rich, Yahoo isn't. End of discussion.)
d) Oracle's Larry Ellison. (Decides to pursue sailing full time.)
e) It's not about the CEO anymore; CNBC-style CEO worship is finished. Get over it.

5. The hottest gadgets of 2002 will be:
a) Digital cameras. (Grandma and Grandpa gotta have one.)
b) Cellular phones. (I'm just putting this here because someone out there wants this choice.)
c) PDAs. (Handspring's Treo will excite the market.)
d) Video-game consoles. (Xbox vs. Playstation fuels a boom.)
e) None of the above.

6. The biggest trouble spot around the globe will be:
a) Argentina. (Will things actually ever get better there?)
b) San Jose, Calif. (Unemployed tech workers of the world unite.)
c) Japan. (It will lose its place as the world's No. 2 economy.)
d) Iraq. (They have caves there too, right?)

7. The telecommunications sector will recover:
a) It won't. Stop asking.
b) Will begin in the second quarter.
c) Will be led by a rejuvenated AT&T.
d) Already has begun. Start loading up on telecom stocks.

8. Silicon Valley venture capitalists will:
a) Avoid publicity for all of 2002 and hope that everyone forgets they once were important.
b) Throw tons of money at "nanotech." (Can someone please explain to me what nanotech is?)
c) Fire their staff members in an effort to hoard management fees for themselves.
d) Stop investing in companies that aren't a morning's drive from their office. Why bother?
e) All of the above.

Happy New Year!