TIME will heal tech price

THE BT Funds Management Time Fund was launched just prior to the “Tech Wreck” of April.

Since then, that fund, like almost all of the players in the Telecommunications, Internet, Media Enter-prises (TIME), has had a performance that has been pedestrian.

Over the last six months that fund has fallen by 8.7 per cent.

This does compare favourably with the NASDAQ and the MSCI BT Funds Management Time index, which have fallen by around 12 per cent over the same period.

BT Funds Management have analysed the reasons for the fall in value in that sector.

In the semiconductor sector, poor earnings guidance from high profile companies such as Apple and Intel had raised concerns that semiconductor demand had reached a peak.

Whilst BT Funds Management was not investing in these two companies, they do make the point that there was associated fallout with other companies in the sector such as Taiwan Semiconductor and Dell.

In the mobile phone sector, the buzzword for some time had been the third generation spectrum, which was to be used primarily for delivery of data services.

However concern was now being expressed as to the spectrum cost.

The capital cost of the spectrum is seen now to be a huge detraction to the providers of these services.

As a consequence companies such as Vodafone and Deutsche Telecom have fallen out of favour with investors.

Companies such as Nokia have been negatively impacted by this migration from second to third generation phones, however, BT Funds Management remains confident that margins will improve once the transition phase is complete.

The key point that BT Funds Management makes is that any implementation of new technology is not smooth.

They recognise that there will be times of discontent where investors will start to question underlying fundamentals.

This has been at its most evident in the telecommunications sector especially in regard to the spectrum fees with no network ready to be rolled out yet.

The longer-term view is still good, with the structural drivers of the new economy still very much intact.

The only thing that investors need to do is to give the sector more “time” before condemning it.

Any investment of this nature is one that needs to be viewed as a long-term investment of at least five-years.

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