Cisco Seen as Strong Post-Election
NEW YORK (
) -- Voters eager to yank the country out of its economic rut handed Republicans control of the House of Representatives, further widening the nation's political split.
The division of power between the House and the Democrat-led Senate was predicted to create legislative gridlock that could preempt sweeping anti-business reforms. But now, with a stalemate in Washington at hand, it still remains unclear whether this was the cure to uncertainty that businesses were looking for.
So what does that mean for the tech sector?
For tech watchers, there weren't any obvious conclusions in the wake of Tuesday's mid-term election results, but some said they see a few opportunities in areas of the tech sector like information technology.
During a White House speech Wednesday, a humbled President Obama acknowledged that the economy was people's top issue and he promised to find some common ground with Republicans and solicit suggestions from businesses to restart growth.
President Obama also tried to reframe some of the challenges the nation faces by drawing an us-against-them picture that suggested the U.S. needed to keep its lead against other countries in areas like technology. By way of an example, the President mentioned that China now has the world's fastest supercomputer.
We need to make "investments in tech that allow us to keep our edge in the global economy," the President said.
Shrugging off the benign rally cry, some investors say that without signs of growth, businesses will continue to look for ways to squeeze expenses.
This is not particularly good news for job creation, but it does suggest that a greater portion of spending will go toward doing more with less. Efforts like bigger, more efficient networks from outfits like
Hewlett-Packard
(HPQ) - Get Report
and
IBM
(IBM) - Get Report
could be one area, while shared resources sectors like computer virtualization (think
VMWare
(VMW) - Get Report
and
EMC
(EMC)
) is another; both areas could be fruitful investments if this theme holds.
"We believe many companies will leverage technology to improve productivity," said an investor who likes networking outfits including
Cisco
(CSCO) - Get Report
. "Cisco is one of the few that's on the receiving end of such high demand."
While that sounds fine for Cisco, the prospect of tighter budgets and even more political bickering make the mid-term elections just another milepost on the road to a so-called recovery.
--Written by Scott Moritz in New York.>To contact this writer, click here: Scott Moritz, or email: scott.moritz@thestreet.com.To follow Scott on Twitter, go to http://twitter.com/MoritzDispatch.>To send a tip, email: tips@thestreet.com.
