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JPMorgan Tech Conference: Taking the Pulse on Tech's Recovery

SAN FRANCISCO -- There was a time when the tech-stock dictum was to "buy 'em at AEA and sell 'em at H&Q." Ah, what a simple time that was. One bought tech stocks at the late autumn gathering of the American Electronics Association in Monterey, Calif., and sold them at Hambrecht & Quist's annual technology conference in San Francisco strictly because tech stocks traded up into the Christmas season, when end products were hot, and down before the summer, when tech stocks typically snoozed.

Everything's changed, of course. During the bubble era, tech-stock investors mostly bought and bought and bought. Whether it's time to sell tech stocks this year depends on far more than summertime cyclicality in the semiconductor industry. What's more, truly hot companies stopped going to AEA, which moved its conference to San Diego. And H&Q, now the technology, media and telecommunications group of JPMorgan H&Q, is just one of several tech conferences hosted by numerous investment banks throughout the year.

Still, the 29th annual H&Q conference -- which kicks off today at the Westin St. Francis Hotel here -- promises to offer a window for tech-stock investors of all stripes. Bears will have plenty of fodder for their contention that the Nasdaq's recent rally is a head-fake worth shorting. Their evidence will be presentations by technology companies whose bad news in the past month has been greeted by rising stocks. Technology bulls will be looking for further evidence that the tech outlook isn't getting any worse, and therefore is destined to make money for investors.

"The timing of the conference is very good this year," enthuses H&Q Research Director Todd Bakar. "Some of the stocks (of presenting companies) are up 50% to 100% off their lows. Now there's lots of confusion as to what's going on. Everyone's trying to sort out the carnage."

Thanks to Regulation FD, nonclients of the investment-banking unit of J.P. Morgan Chase (JPM) can listen to all the public presentations of the listed companies presenting at the conference. The bank will Web cast those presentations, though it won't make available the presentations of private companies pitching to investors. Because so few companies have gone public since the last H&Q conference, this fare of publicly traded companies almost exclusively will be made up of established technology concerns and busted IPOs from the past several years. As most technology companies have by now reported first-quarter results, the H&Q conference is a decent opportunity to speak somewhat openly about outlooks for the year.

"Everyone's trying to find out where the bottom is," says Bakar, who personally guesses that a tech-industry recovery won't occur until 2002 at the earliest. As stocks tend to recover about six months before their underlying markets do, a tech-stock recovery might be around the corner if a recovery comes early in the year. But that's a big if.

Investors should understand that despite the need to share public presentations with individual investors, investment banking conferences are all about serving the bank's clients. That's why a bank attempts to line up headline talent to excite or inform the clientele. Headliners this year will include California Governor Gray Davis, perhaps the most embattled politician in America. Texas Instruments' (TXN) CEO Thomas Engibous and Siebel Systems' (SEBL) CEO Tom Siebel will get solo platforms to detail their outlooks, both of which have been grim of late.

These conferences also are about making money, but will include as least one emotional moment on Thursday, when JPMorgan H&Q Chairman & CEO Daniel Case introduces his younger brother, Steve Case, chairman of AOL Time Warner (AOL), for a 1 p.m. keynote speech. Dan Case, the 41-year-old investment banker, recently underwent surgery for a malignant brain tumor, according to a firm spokeswoman, and will announce Monday that he is cutting back his responsibilities to a part-time basis and stepping down as CEO. Bankers David Golden and Julie Richardson will be named co-directors of investment banking, and longtime H&Q executive Cristina Morgan will become vice chairman.

In keeping with TSC's editorial policy, Adam Lashinsky doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, frequently guest hosts the TechTV cable television news show Silicon Spin, and is a regular commentator on public radio's Marketplace program. He welcomes your feedback and invites you to send it to Adam Lashinsky.

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