Analyst: The Great Dark Times Cometh!
The financial markets’ descent into the maelstrom over the past several weeks is proving quite a test of faith for Collins Stewart analyst Sandeep Aggarwal. Last week he cut his estimates for Yahoo (YHOO), citing the company’s deteriorating fundamentals. Since then he’s become increasingly dismayed by Wall Street’s continued collapse, so much so that today he slashed estimates on a host of tech stocks, among them Google (GOOG), Microsoft (MSFT) and comScore (SCOR). “Failed banks, massive credit crunch, job losses, and lower consumer confidence now characterize the macro economy,” Aggarwal wrote in a Friday research note. “We believe this will hurt the Internet sector more than currently believed.”
And it will hurt some Internet companies more than others.
“Should the economy run into a recession, this would be only the second downward economic cycle for the Internet. Each Internet company is at a different phase of its evolution,” Aggarwal added. “We believe that a possible recession will be felt harder by those companies that have been delivering extremely high organic growth rates, have high operating leverage, or are approaching minimum operating scale levels in 2008-2009.”
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