US stocks retreat on Dell acquisition
On the surface of it the US stock market's reaction to Dell's $3.9 billion acquisition of Perot Systems would appear to be a kick in the teeth for the US technology market, but this may not be the case in the longer term. Dell shares were down 3.6% after the announcement of the deal with many believing the company may have overpaid in a bid to match rival Hewlett-Packard which recently acquired a similar type of business. So what does this mean to the sector?
If you put valuations aside, the very fact that Dell has been able to raise nearly $4 billion for the acquisition is good news in itself. It is highly likely that over the next few weeks and months we will see investors playing a game of "find the next acquisition target" with many bombed out stocks to choose from. Those who have been involved with the stock market at some time will be well aware that it was the technology market which pushed us ahead at the turn-of-the-century and led us lower after the demise of the US and worldwide money markets.
The technology sector has always been a good indicator as to the future direction of worldwide economies and it is worth following the performance of the sector in the short, medium and longer term.
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