Facebook IPO: Is the technology sector back in vogue?

AIC
The Association of Investment Companies
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Post date: Thursday, 9th February 2012

The technology industry has been brought into the spotlight following last week's announcement on the planned IPO of the ubiquitous social media site, Facebook.

With firms such as Google, Apple and Groupon recently signing leases for new premises in London to accommodate their expansion, the Association of Investment Companies asks ... is the technology sector fashionable again?

Walter Price, manager of the RCM Technology Trust, said: “Facebook could be one of the most important companies to emerge from Silicon Valley, RCM's backyard, in history.''  

Ben Rogoff, manager of the Polar Capital Technology Trust, said: “The Facebook IPO is a good opportunity for investors to reconsider the merits of the technology sector, which despite better growth prospects and a vastly superior aggregate balance sheet trades broadly in line with the market multiple. It is also a timely reminder that a new technology cycle is continuing to unfold driven by cloud computing, broadband applications and mobile data.

"Specifically we've been adding to our networking exposure, as we are hopeful that US service provider spending will improve through the year. We've also added to our semiconductor exposure as a cycle low is in this quarter, and also semiconductor equipment companies due to rising capital intensity as manufacturing moves to smaller nodes."

James Anderson, manager of Scottish Mortgage Investment Trust, said: "Amidst the fashionable and exaggerated gloom it is the accelerating pace of change in technology and dramatic innovation that should give the pessimists most cause for thought. Innovation is transforming our societies and generating fabulously strong companies with remarkable economics and superb growth prospects.

"The leaders are broadening out from being dominated by electronics into fields as diverse as social media and healthcare (from genomics to robot surgery) and with China joining the West coast of America as a driver of rapid and disruptive change."

Walter Price, manager of the RCM Technology Trust, said: ''We think Facebook is one of the most exciting companies to come public in this decade. Users are constantly updating the information on their pages and, by parsing this information, Facebook has a database of hundreds of millions of people that is fresh and unique.

“Using this data well should allow advertisers to target product introductions, build loyalty to their products, and establish a relationship with their best customers that they never had an opportunity to do in the past.”

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