The Nasdaq stock market could be in for a further major upheaval as overvalued giants such as chip-manufacturer Intel, software firm Microsoft and communications-equipment maker Cisco Systems lose their leadership positions, UBS Asset Management believes.
'The key issue here is that the big companies that led the tech boom are coming under some challenge,' said Wayne Thornbrough, managing director of global growth equities for the fund-management house.
'They are also in the most trouble potentially with pricing on PE [price earnings ratio] and other issues. They are also under assault from the literally hundreds of new companies that have gone public with hot new ideas.'
As the technology story has unfolded in the past four decades, the sector has swung from being dominated by a few companies to periods when there were no clear leaders.
For example, IBM dominated in the 60s with its main frame computers but a host of smaller companies producing mini-computers broke IBM's stranglehold. 'The whole thing about technology is that it has been about people having control then losing control,' said New York-based Mr Thornbrough.
Where the giants go wrong is not having the faith to make the leap into new areas and call it a day on products past their sell-by dates, according to Ian Rowley, global growth strategist for UBS Asset Management.
