The Seemingly Bottomless Tech - TheStreet

The Seemingly Bottomless Tech

It isn't Lexmark, which lives and dies by guidance, that's scaring people. It's Broadcom, which loses out despite a very good quarter.
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It's not the Lexmarks (LXK) that have people spooked. It is the Broadcoms (BRCM) !

Look, Lexmark blew it. It guided up, for whatever reasons, and then guided down, for whatever reasons. The guide up got the stock into the 90s from the 60s. The guide down took the stock back to where it came from. Live by the guidance; die by the guidance.

But Broadcom, well, all it did was deliver a quarter much better than expected. No, much, much better than expected. Make that much, much, much better. And what happened?

You made money for about 30 seconds, and now you are getting killed like everything else in tech. What that says to the average tech buyer is the following calculus: Your tech company blows the quarter; it loses a third of its value. Your tech company blows the quarter and the guidance; you lose 3/8ths of your value. Your tech company blows away the quarter and raises the guidance? You only lose a tenth of your value.

That means people are thinking, "How can I make any money in tech if I get it right and I still lose money?"

That's a sign that the bottom in tech, which I had hoped had been reached already, is still very illusive.

Broadcom isn't the only blowaway quarter that yielded a bad trade for techies.

Applied Micro

(AMCC)

blew away numbers and it, too, lost points like Broadcom. It is still going down. And now

Sun

(SUNW) - Get Report

is back to where it was before the great quarter! It's the winners that are sowing confusion and fear, not the losers.

In the meantime,

Warner-Lambert

(WLA)

reports an OK quarter, and it goes up.

The bell goes off when you see that stuff.

It is ringing loudly.

Random musings:

You get the sense that some big institution wants out of

Xerox

(XRX) - Get Report

? Holy cow! Merciless.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Sun Microsystems. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.