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Nov.12

10:58 AM ET

Wednesday, 12 Nov 2008

Tech Prepares for Holiday Shopping Mess

Posted By:Jim Goldman

Topics:Wireless Communications | Video Games | Information Technology | Internet | Technology

Sectors:Software and Computer Services | Software | Telecommunications | Internet | Technology

Best Buy
CNBC.com
If you thought Circuit City's problems were its own, that rival Best Buy was killing the competition, think again. And the Best Buy warning this morning will send ripples through just about anyone doing business in consumer electronics.

That means Apple, which recently added Best Buy as an iPhone retailer, and Intel, and SanDisk, Seagate, Hewlett-Packard, games companies including Microsoft, Sony, Nintendo, and publishers like Electronic Arts and Activision.

In a release this morning, Best Buy calls the current quarter the "most difficult climate we've ever seen."

Just this morning RBC lowered expectations on Apple and Research in Motion because of stiffening, macro-economic headwinds. Citi lowered expectations on Google (but still maintains a "buy") because what could be the first back-to-back advertising spending declines since the 1950s.

None of this should come as much of a surprise. If we're not in a recession yet, we're careening toward one. It will be deep. And painful. And likely last through 2009 from everything I've read, and most experts to whom I've spoken. Business has fallen off a cliff for so many sectors.

But let's consider a few key things: recessions are events that tend to feature a beginning, middle and an end. This recession will end. Consumers will be emboldened once again. The sun will come out tomorrow. In the meantime, scary headlines will continue to dominate, eclipsing even hints of good news.

The Tech Check Holiday Gift Guide! What's Your Best Idea

To wit: in an upcoming post, I'll focus on Blizzard's midnight release tonight of the expansion of its "World of Warcraft" franchise. This should generate $130 million in revenue in its first 24 hours, and could actually help juice PC sales. Video games and those playing in that sector could actually see surprisingly good results this holiday shopping season. Likewise, ChangeWave suggests that Apple might see surging laptop sales this holiday season, capturing more of the market than originally anticipated. Just remember there's a big world out there and international sales for some of these key companies may be better than anticipated in some regions.

It's easy to paint all of tech as a disaster, but doing so prevents the savvy investor from spotting a few diamonds, like Apple, amid all that coal.

Tell me what you're doing: are you bottom-feeding? Are any tech stocks still attractive? Are you standing pat, staying on the sidelines? What makes sense? And tell me your age too. I'm curious to know the risk tolerance. I'll try to post some comments later today.

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