It feels just like starting over these days for computer hardware investors.

Not long ago, there were few hotter sectors than theirs. In late March, the

Philadelphia Stock Exchange Computer Boxmaker Index

, or BMX, was up 25% on the year. And though those gains got slimmer as the

Nasdaq

fell apart, there was reason for encouragement in the boxxies' relative

outperformance

vis a vis

the broader tech market.

No longer. Recent weeks have been merciless to hardware stocks, with

Apple

(AAPL) - Get Report

,

EMC

(EMC)

and

Sun Microsystems

(SUNW) - Get Report

shares having lost at least 15% of their value since May 16.

The BMX, meanwhile, finds itself pretty much right back where it started 2000; the index was down 2.4% on the year as of Thursday's close.

Unfortunately, observers don't see the tone improving in the immediate future: The hardware sector is entering a vacuum that won't be disturbed until earnings reports start coming in mid-July.

Ryan's Hope

"I see no catalyst," says Charlie Wolf, analyst at

UBS Warburg

. "Not until we get to July. And from what I can tell, based on body language, everything's pretty much on track for the quarter. There doesn't seem to be any hope for any upside surprises in July or August."

Lacking Moxie?
Tough going for the boxxies

In the meantime, the market will look for any developments in the industry's two most salient themes: components availability and the state of corporate demand.

Thus far, the bulk of the talk about components shortages has been confined to flash memory (an integral part for handheld-device and mobile-phone manufacturers) and the high-end DRAM market, where most analysts expect some tightness to occur toward the end of the year.

But

Gateway

(GTW)

highlighted another possible components problem Wednesday on a

Banc of America Securities

conference call, during which CFO John Todd noted that the company could have sold more computers at the $900 level if it were able to get the necessary processors from

Intel

(INTC) - Get Report

. To compensate, said Todd, Gateway would increase its use of chips made by

Advanced Micro Devices

(AMD) - Get Report

.

Corporate Demand

Corporate demand, meanwhile, has been the dominant issue among PC investors since

Microsoft

(MSFT) - Get Report

warned in April that soft sales of computers to businesses, associated with a slow uptake of its

Windows 2000

operating system, would weigh on its second-half results. PC analysts have thus far refused to accept Microsoft's forecast, holding to their belief that demand will rebound as the year progresses.

"That's been a big concern," says

Deutsche Banc Alex. Brown

analyst Phil Rueppel. "A lot of us have understood that Y2K did affect the purchase cycle over the first couple quarters of the year. But it's difficult to prove that's the case. We expect corporate demand to start picking up in the second half, and we're looking for the data points to see that's happening. We're still waiting."

Complicating the demand picture is the

Federal Reserve's

aggressive tightening program. The conventional wisdom on Wall Street is that rising short-term interest rates won't have much of an effect on information-technology spending by corporations, which find themselves forced to keep buying new hardware as they try to link to the New Economy.

Ominous Sign?

But a

Merrill Lynch

sector conference call Thursday contained one possibly ominous sign. On that call,

Computer Reseller News

presented the results of its latest monthly poll of information-technology executives. John Roberts,

CRN's

director of editorial research, noted that for large companies, the number of executives expecting a recession to occur within the next six months had risen to 26%, a considerable jump from the prior month's 15%.

"Previous analysis of our data has shown that when this figure goes up, companies do tend to do a little bit of pulling back," Roberts said, adding that CRN was cutting a full percentage point off its spending estimates for 2000.

With news like that likely to keep hardware investors on edge until July, it could take a disruption in the market's increasingly dour sentiment on tech to help the sector mount a convincing reversal.