Skittish Investors Toss Their Chips

Still, the new wariness over tech has created some odd disconnects.

Growing skittishness among analysts and fund managers has coincided with increasing bullishness from tech CEOs. For example, top executives at IBM(IBM), Microsoft (MSFT), Dell(DELL) and Intel(INTC) all say corporate IT spending is rising.

Renewed enterprise spending was mostly responsible for better-than-expected growth in first-quarter computer shipments, according to research house IDC. Global PC shipments rose 16.5% to 41.2 million units, faster than the 13.5% expected by IDC.

On April 29, the Commerce Department said first-quarter business spending on equipment and software rose a robust 11.5%.

"We think enterprise spending will continue to pick up and companies will continue to post solid growth in earnings," said Casey. The problem in a rising interest rate environment is where valuations stand and where the leadership is."

Anticipating the turn, his fund started unloading clients' stakes in, among others, Applied Materials(AMAT) and EMC(EMC) earlier this year. Although Casey owns blue-chip tech names like Microsoft and IBM, he sounded more enthused about indirect plays on tech trends, such as education companies that retrain workers, including Apollo Group(APOL), Career Education(CECO) and ITT Educational Services(ESI).

Another favored sector is video game software, where Casey has a stake in Electronic Arts(ERTS).

Not only have tech favorites shifted, but investors have grown a lot savvier after the heartbreak of the tech bubble's bust. From 2000 through 2002, many rode tech stocks all the way to the bottom, hoping in vain for a turnaround. But this time they're speeding for the exits, anticipating the inevitable downturn well before it actually happens.

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