LAS VEGAS -- No one needed to refresh the Comdex crowd's memory on the tech bust.

Metal detectors, bomb sniffing dogs and tight budgets set the tone for Comdex 2001, instead of the IPOs and stock-market cash of the past five years. Attendance at the world's premier technology conference is around 30% lighter this year, which is a good development because the handouts, booths and parties have been cut off at the knees along with all things tech.

In its debilitated state, Comdex invited several legends from the financial side of the tech boom to explain how the stock "meltdown" happened and to forecast when things will get better. The money men didn't heap on the bad news, surprisingly enough, but they did outline a new phase of tech-stock performance requiring a more trade-oriented investor.

Lehman Brothers' Dan Niles and Goldman's Rick Sherlund represented the analysts, with AIM's Abel Garcia pulling for mutual funds and techinvestment banking patriarchs Sandy Robertson, now doing LBOswith Francisco Partners, and Bill Hambrecht of W.R. Hambrecht roundingout the group.

About the only thing all parties from bull to bear couldagree on is the current weakness in tech earnings. Robertson cautionedthat in his search for lagging companies or segments of largecorporations, he's seeing mostly a consistent decline in earnings, nota "glide pattern" of poor but then flattening out returns. Until lossesstabilize, he says he can't turn bullish.

Niles thinks that while stock prices might bounce back a bit, "it has to show up in the earnings" to be meaningful, and that it's not so important when the stock bottoms, compared to when revenue and profits do the same.Niles believes chip revenue will hit bottom in the first quarter of 2002.

Fund manager Garcia declared he was the one panelist who didn't"have the luxury to pontificate and be bearish," and emphasized thatthe stock market has posted impressive gains since Sept. 24. "Themarket is all about confidence in the economy and to some degree inwhat

President Bush is doing," he said.

While Garcia grudgingly agrees that the 1994-2000 period saw a lot of overbuying among tech customers, he believes inventories are almost worked down among wireless component makers and contract manufacturers, for example. He sayssuch recent inklings of strength are important: "a little bitof improvement goes a long way."

Sherlund echoed the point in illustrating his Tuesday call toreduce revenue estimates for

Oracle

(ORCL) - Get Report

based on information that its salesin Asia and Europe have softened in the past four weeks. He didn'texpect investors to react negatively, he said, because "everybody knowsit's bad now. It's what happens in the second half of 2002," orcompanies' expectation for that period, that matters to investors.Sherlund thinks stock moves since September are "reflecting a lot ofoptimism" for the latter part of next year.

While Hambrecht explained that the past year-and-a-half remind himof the mid-'70s -- "the last time I had a respectable handicap in golf; myafternoons were pretty pressure free," as he put it -- the boutiquebanker sees some unique characteristics of the slowdown. "The markethas been disproportionately harsh on smaller companies," he said,followed by a chorus of nods up and down the panel.

Hambrecht believes the market will recover in the second or third quarter of 2002. He also thinks one of the most important recovery signals to come will be the return to 10%-12% growth in IT spending per year, back to prebubblelevels.

Given all of this, how should investors should deal withtech in the next year? Sherlund warned that big investors such asmutual funds won't want to be late on a second-half rebound in techstocks. After that, he said, pent-up demand for certainnonboom IT spending like long-suffering PCs might see a spurt once the freedom to buy returns to corporateAmerica.

Niles agreed, but threw out several data points from chipupticks that never quite turned into full-fledged climbs from the lowsin the mid-1980s. He stressed that the next several years would be a timefor the trading investor, rather than the buy-and-hold type expectingstocks to continuously march upward. "You could make a lot of money intrading cycles," he said.

Sherlund braced investors for tech to be in a funk for "a fewyears." Nonetheless, Robertson asserted the possibility for investorprofits, citing the example of a soft markets before 1982. "It wasstill possible to do IPOs, but we had to be careful. The filter oncompanies was very fine," he said. Investors have a few months totighten up their standards and get back the stomach to put money intotech stocks.