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Tech stocks still doing well despite volatility

A stock board at the New York Stock Exchange

TEXT OF STORY

Bill Radke: Earnings season is underway. How much companies are making could tell us a lot about this economic recovery. It looks like one of the bright spots will be the technology sector. The chipmaker Intel yesterday said it earned nearly $3 billion last quarter, and other tech companies are expected to show profits. We asked Marketplace's Mitchell Hartman to explain what's going on with tech.


Mitchell Hartman: In spite of the recent volatility on Wall Street, analyst Mike Raimondi at IHS Global Insight says technology companies have performed consistently well.

Mike Raimondi: You do have tech stocks that are surging.

Raimondi says this is partly just the upside of corporate downsizing.

Raimondi: They've shed a lot of their cost, slimmed down, gotten rid of a lot of people, so their earnings look much better.

And Raimondi says even with the recovery faltering, sales of high-tech equipment continue to strengthen. He predicts they'll up 6 percent this year, nearly 10 percent in 2011.

Carl Howe is a tech analyst with the Yankee Group. He says businesses that put off upgrades during the recession are now going shopping.

Carl Howe: Eventually, you've got to replace some of the gear you bought several years ago.

And when that new gear helps your company become more profitable, all the better.

Howe: People use technology to make themselves more productive.

So even if people hold back on most consumer spending, Howe says, they'll STILL keep upgrading their smartphones and laptops every time a new model comes out.

I'm Mitchell Hartman for Marketplace.

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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