Brian.oco 0 Posting Whiz

Scary reading from the pages of Fortune magazine this week.

In the business weekly's November 19 edition, an article entitled "The End of the Tech Stock Party" goes down like a tofu turkey on Thanksgiving night.

Before I get into what Fortune has to say, it's pretty clear that technology stocks are in a decline. Quarterly numbers from heavyweights like HP, Apple, and even Cisco, who I touted last week, seem okay at first glance. But a closer look reveals that bean counters at the big technology companies believe that the run on computers and other high tech gadgets will slow down, and significantly, in 2008.

The industry fully expects consumers and business customers to tighten their belts next year, pulled back by a rising tide of fresh credit problems on the home lending side that could bleed into the credit card market -- a major, if negative, event for consumers who use plastic for high-end purchases.

Not helping matters is the rising cost of oil and energy. With oil at $100 a barrel, even if it falls back to $70 or $80 or so, as I expect it will, will leave less money in the pockets of buyers who might otherwise buy an iPhone or an HP laptop.

That's pretty much the take from Fortune this week. The editors there are, metaphorically speaking, draping the black bunting and calling the next of kin when it comes to technology stocks. Take the article's lead sentance: "Break out the orange juice and aspirin: Wall Street’s tech party is officially in hangover mode."

Fortune points to Apple shares being down 14 percent from their high of $192 earlier this month, while Google shares are down 15 percent, and Research in Motion off by 22 percent.

"Why the buzz kill?," asks Fortune. "Blame the subprime mortgage fiasco, gas prices and a credit crunch that is slowly infecting other parts of the economy. Because the consumers and businesses who have driven tech industry growth for the past few years are finally getting skittish, they’re knocking tech’s growth prospects into a lower gear."

The magazine points out that the tech sector isn't declining gradually, it's falling off a cliff. "The Nasdaq Computer index — which includes computer services, Internet, software, computer hardware, electronic office equipment, and semiconductor companies — was up about 30 percent for the year until it lost nearly 10 percent this month. By comparison, the S&P 500 had gained only about 11 percent for the year before it gave up more than half of those gains over the last two weeks."

My take on the article is that there some merit to the big-picture economic consensus that credit woes and high energy prices could drag the tech sector down in 2008. What's giving me pause is the amazing resiliency of the U.S. consumer. We've had high oil prices and a bad credit picture for months now, yet technology stocks, by and large, should be up for the year. People are still buying big-ticket items.

Maybe it's more likely that there will be a downturn in the technology market, but it shouldn't be as nasty as Fortune is saying. It's an election year next year and, historically, markets don't gyrate too much in such years -- the markets like to play it conservatively until it knows who will be residing in the White House come November.

That should help the technology sector repel any drastic market losses. Even so, I don't think 2008 will be a banner year for technology stocks.