When reviewing the best- and the worst-performing technology funds for the five trading days ended Thursday, Nov. 13, the clearest disparity is between first-tier and second-tier telecommunications companies.
The worst-performing fund during the week was the ProFunds Mobile Telecommunications UltraSector ProFund (WCPIX), which lost 32.38% on 150% leverage to the Dow Jones U.S. Mobile Communications Index. Five of its seven member stocks retreated.
Shares of Sprint Nextel (S), which makes up 52.7% of the index, declined 39.1%, smacking the fund pretty hard. Sprint's book of customers shrank by another 1.1 million contracts in the third quarter. Cost cuts from closing employee cafeterias and turning down heaters have not proved sufficient, and Sprint is now offering employees a sweetened buyout package of eight weeks' pay plus two weeks for each year of service. Sprint stock has sunk to a level not seen since 1980.
Two other holdings of the Mobile Telecom ProFund include MetroPCS (PCS), down 14.5%, and Leap Wireless (LEAP - Get Report), down 17.0%. These companies just can't compete against the first-tier players with coast-to-coast cellular networks. They are burying the hatchet of prior lawsuits and pairing up to allow free roaming on each other's networks to cover a more-than-300-city footprint in America. Their so-called "nationwide" network fails to cover New York City, Boston or Chicago, potentially expensive omissions to fix.The second worst-performing fund on the list, PowerShares Nasdaq Internet Portfolio (PNQI), shed 13.07% last week. Shares of its largest holding, Yahoo! (YHOO - Get Report), fell 20.1% in the same period. Other shares in the fund that racked up declines were Bidz.com (BIDZ), which fell 49.2%, Art Technology Group (ARTG), which fell 30.9%, and Web.com Group (WWWW), which sank 23.4%. Yahoo! CEO Jerry Yang warned of the worst advertising environment in decades. (For full disclosure, this fund also holds a small quantity of TheStreet.com (TSCM) shares, which slipped 6.9% for the week. TheStreet.com is the publisher of this Web site.) Also in the double-digit loss column, PowerShares Lux Nanotech Portfolio (PXN) gave up 11.07% as Altair Nanotechnologies (ALTI), BioSante Pharmaceuticals (BPAX) and Veeco Instruments (VECO) each lost about one-third of their value.
|Worst-Performing Technology Funds for the Week Ending Thursday, Nov. 13
|Fund||Ticker||Rating||Fund Type||One-Week Total Return|
|ProFunds Mobile Telecommunications UltraSector ProFund||WCPIX||E-||Mutual Fund||-32.38%|
|PowerShares Nasdaq Internet Portfolio||PNQI||U||ETF||-13.07%|
|PowerShares Lux Nanotech Portfolio||PXN||D||ETF||-11.07%|
|Powershares Dynamic Media Portfolio||PBS||C-||ETF||-8.69%|
|SPDR S&P Semiconductor ETF||XSD||D-||ETF||-6.95%|
|Internet HOLDRs Trust||HHH||D||ETF||-6.41%|
|ProShares UltraShort Telecommunications||TLL||U||ETF||-6.23%|
|PowerShares Dynamic Telecommunications & Wireless Portfolio||PTE||D+||ETF||-6.11%|
|Powershares Dynamic Networking Portfolio||PXQ||D||ETF||-5.83%|
|Jacob Internet Fund||JAMFX||E-||Mutual Fund||-5.76%|
|Source: Bloomberg & TheStreet.com Ratings|