Growth-Fund Managers Take Different Tack

Guinther has been avoiding makers of semiconductors and computers because they are plagued by excess supplies. He has been buying software producers that help customers control costs. A favorite holding is Ariba(ARBA Quote), which makes software and systems that enable major companies to purchase office supplies and equipment more efficiently. Ariba's systems collect orders from customers and make bulk purchases, saving time and money.

Another fund that modified its approach is Needham Growth(NEEGX Quote). In the past, Needham often preferred companies with growth rates of more than 15%. But now times have changed. "We are looking for companies that can survive and grow over the long term," says portfolio manager Bernard Lirola.

A large holding is Resources Connection(RECN Quote), which supplies corporate clients with temporary staff who provide accounting and legal services. Helping customers cut costs, the company should remain profitable during the recession, Lirola says. When the economy finally recovers, Resources Connection should resume delivering the kind of rising earnings that growth managers crave.