Technology Seen Becoming an Increasing Commodity

September 15, 2004, 1:00 a.m. EDT 1 Min Read

Technology giants like Intel are headed down the same path as utility providers, The Economist predicts.

The magazine slams Intel in a recent article, saying the information superhighway has become overcrowded with too many technology hardware providers chasing a limited supply of buyers.

Drawing a comparison between the boom-and-bust cycle of Londons main power suppliers more than 100 years ago The Economist argues that after the recent technology bubble burst, Intel had also begun lapsing into a commodity and that its days of headlong skyrocketing returns are reaching an end.

Intel missed analysts estimates earlier this month and its stock subsequently dropped by 7%, decreasing the companys value by $10 billion. Based on past performance, The Economist says Intel faces a long, gradual decline while its valuations return to plausible levels and investors predictably shift their attention away from technology stocks.

Dell , which trades at a multiple of 31 times earnings, may soon follow Intels descent if its sales continue on a downward path, The Economist further states.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.