Investors caught up in the exuberance of an illusory tech-stock recovery in April and May are now shocked to learn that the second quarter is lousier than even the pessimists expected. It seems that the theory of buying because things couldn't possibly get any worse wasn't so sound after all. And yet, the tech bulls -- despite



, despite

Advanced Micro Devices

(AMD) - Get Report

, despite whatever bombs go off this week -- say it's now all about 2002. In 2002, they say, tech-company growth will resume, so you've got to get on board now.

An influential two-month-old report from

Goldman Sachs

suggests otherwise. Investors planning to plunge back into tech should consider its findings, namely that when growth does resume, for many companies it will look nothing like the growth of the golden era between 1998 and 2000 -- now painfully known as the tech-stock bubble.

I've teased Goldman Sachs for its list of

"bullet-proof" companies (many since riddled with bullets) and

short-lived loyalty to former investment-banking clients. But this piece of research, headed by newly anointed technology strategist

Laura Conigliaro

, is an important document for institutional and individual investors in technology stocks.

Titled "Backing Out the Bubble," the report hypothetically considers what normalized growth rates at 37 top technology companies might have been if not for the economy-on-steroids effect produced by pre-Y2K and Internet-infrastructure spending. The conclusions: The bubble era produced as much as $70 billion in "above-trend revenues" for these companies in the three years beginning in 1998.

The Goldman research project largely is an exercise in historical research, but the point is to prognosticate. If historical growth rates were inflated, it posits, then projected growth must be smaller than we all thought as well. To wit, Goldman lowered three-year earnings projections for the group from 33% to 26%, "a level that may still prove to be too optimistic," it notes.

The key lesson is that investors hoping for tech stocks to come roaring back in 2002 very likely are kidding themselves. "Without some new major technology innovation stimulating growth, user patterns could be boringly normal," the report states. Translation: Corporate and consumer buyers of information technology will go back to normal -- or, still suffering from indigestion, below normal -- consumption.

Goldman released its report on the last day of April, when tech stocks were in the middle of what would become a 30%-plus run from their April 4 low. But the report warns that fundamentals weren't backing up the resurgence, so the equity research team wasn't ready to send clients back into the fray. That was a good and prudent call.

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I caught up with a somewhat shell-shocked Conigliaro Friday afternoon. She confessed wanting to stick her head in the sand following

EMC's dramatic downward revision in its revenue and earnings forecast for the second quarter. Conigliaro is a bull at heart, so you can feel her pain as she documents the carnage. She's guessing


(IBM) - Get Report

won't drastically miss its financial targets for the second quarter, but she notes that most of its main businesses -- PCs, storage systems, Unix servers and the consulting part of its crucial global services division -- all are economically sensitive. "They can't escape, but I'm not expecting a disaster," she says.

Incidentally, IBM is one of a handful of companies in the "Backing Out the Bubble" report that, because it benefited less than others from the Internet craze, stands to lose less in its aftermath. Goldman researchers backed out no revenue from IBM's three-year results. Similarly, although Goldman backed out several billion dollars in


(MSFT) - Get Report

revenue, it keeps its three-year growth rate at 16%. Not so lucky is

Sun Microsystems

(SUNW) - Get Report

, which once bragged that dot-com companies represented only a small fraction of sales. That represented one of the early Big Lies of the Internet era, that there would be no indirect effects of the downturn. Sun's three-year growth rate drops from 30% to 20% in Goldman's study.

Goldman's methodology is admittedly subjective; its analysts made educated guesses at what "normal" growth would have looked like. In a way, that's no different than silly and subjective assumptions groups like




made about trillion-dollar electronic-exchange markets. But there's a crucial distinction. Those earlier flights of fancy (which Goldman bankers and analysts relied on for their own exuberant work) attempted to create facts from hope. This report attempts to paint a picture of reality from an unreal period. In other words, it measures the potential downside, not the hoped-for upside.

Skeptical investors will take note.

In keeping with TSC's editorial policy, Adam Lashinsky doesn't own or short individual stocks, although he owns stock in 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.