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Tech, Internet Funds Jumped in Week

Kevin Baker

As confidence in the American economy hits a 26-year low on the Reuters/University of Michigan Sentiment Index, gasoline bubbles to about $4 a gallon and real estate requiring long commutes remains depressed. This has consumers cutting back on premium items such as StarbucksSBUX coffee and restricting purchases to must-have products like Apple'sAAPL MacBook Air.

Apple reported 36% higher second-quarter net income topping $1 billion and a 43% bump in sales to $7.51 billion. Its shares gained 9.35% for the period under review.

Meanwhile, by rolling out AT&TT high-speed Internet Wi-Fi service at 7,000 locations by year's end, Starbucks may be trying to convince investors that should be valued as a tech stock where customers rent a half hour of Internet usage for each Venti Caramel Macchiato purchased.

The top-performing technology, Internet or telecommunications fund this week is the Ultra Technology ProSharesROM, up 9.73%. The fund is 200% leveraged to the stocks of the Dow Jones U.S. Technology Index, while the fourth-place ProFunds Technology UltraSector ProFundTEPIX gained 8.33% on 150% leverage.

Top index holdings include MicrosoftMSFT, Cisco SystemsCSCO, GoogleGOOG, and IBMIBM. Microsoft reported $4.93 billion in quarterly earnings, which missed expectations and lagged the same quarter last year, yet the stock added 8.83% for the week. Another index member, F5 NetworksFFIV, advanced 19.58% this week, reporting 25% year-over-year revenue growth in its fiscal second quarter.

The second-place fund, Ultra Telecommunications ProSharesLTL, is a brand-new, barely traded fund 200% leveraged to the Dow Jones U.S. Telecom Index. Sprint NextelS jumped 22.85% while ComcastCMCSA and Time Warner CableTWX pulled out of the "Pivot" joint venture, with customers reverting to Sprint mobile-phone plans. Level 3 CommunicationsLVLT popped 22.77% in a short-squeeze by shrinking its quarterly loss.

PowerShares Dynamic Networking PortfolioPXQ held third place with a return of 8.86%. The holdings making the biggest moves include BroadcomBRCM, up 28.13%; PMC - SierraPMCS, up 26.22%; Altheros CommunicationsATHR, up 12.28%; and Juniper NetworksJNPR, up 10.15%.

The two worst performing funds are the inverse funds of the two best performers: UltraShort Technology ProSharesREW, down 9.12%; and UltraShort Telecommunications ProSharesTLL, down 8.80%.

On top of losing twice the gains in Broadcom and PMC - Sierra, the UltraShort Semiconductors ProSharesSSG suffered the 23.30% ascent in LSILSI, 22.53% in Marvell TechnologyMRVL, and the 19.00% in RF Micro Devices IncRFMD.

Not only did Broadcom report a great first quarter, with 22% higher net income on 15% higher sales due in part to strong sales of NintendoNTDOY Wii videogame consoles, but it also issued bullish second quarter revenue guidance. PMC - Sierra also beat analyst estimates on 21% higher sales, as did LSI, with a 42% bigger quarterly top-line figure.

This year AT&T plans to spend nearly $20 billion to speed up the phone line and wireless handset access to the Internet. This can only be good for all technology businesses trying to make money on the net.

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1 What would best describe your stance heading into the coming week of trading? Bullish Bearish Neutral 2 Which of these sectors do you think is set to move up in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities 3 Which of these sectors do you think is set to move down in the coming week? --Choose One--Aerospace and DefenseAirlinesAutomobilesBeverages and Food ProductsBiotechnologyCommercial BanksComputers and PeripheralsConsumer NondurablesEnergy Equipment & ServicesHMOs and HospitalsHomebuildingInsuranceIntegrated OilInternet, Software ServicesInvestment Bankers and BrokersMediaMultiline RetailPharmaceuticalsPrecious MetalsSemis, Semi EquipmentTelecom EquipmentTobacco and AlcoholWireless CommunicationsUtilities View the results without voting