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Tech stocks - Tuesday, September 16, 2008

Plantronics Will At Least Help You Call Your Broker

Saying "I told you so" is easy, especially when you offer as many stock picks as the staff at tech:stocker. But with AIG (AIG:NYSE), we can't help but remind readers that we pleaded with investors to stay away back on July 13 and questioned Fidelity's Magellan Fund (FMAGX) Manager Harry Larige recent decision to invest over $700m on August 1. The lesson to be learned here is not that the staff at tech:stocker is always right (because we're still hoping someone will bail us out of our WaMu (WM:NYSE) recommendation), but that market "pros" make mistakes like everyone else. Don't blindly follow the moves of fund managers otherwise your investment could be down 93.6% YTD like AIG.

Tomorrow we're going to look at possible investments in the financial services industry as the staff is still doing research and does not want another WaMu tarnishing its recommendation resume. Instead, we're back to technology industry and looking at Plantronics (PLT:NASDAQ).

The market for Bluetooth headsets is growing. Recent legislation in California has motivated the largest state in the U.S. to arm themselves with ear pieces if they are going to discuss trivial business matters or yell at their nanny for forgetting to pick-up their kids at school. California certainly isn't going to be the last state that that requires hands-free communication when driving so we expect this aspect of their business to continue to grow, regardless of the competition in the short term. And that's a good thing for Plantronics as we prefer the performance (and style) of the Jawbone headset to the Discovery 925.

Our only concern in the immediate future for Plantronics is their product offering for businesses. With companies looking to control costs, we have a hard time seeing anyone but the most profitable companies splurging on wireless headsets for their employees to wear around the office. The Altec Lansing line of products that make the iPod "rock" might not meet sales expectations with reduced consumer spending but this also shouldn't affect the bottom line significantly. If Plantronics could employ its marketing skills to this product line, they could turn this around quickly.

And Plantronics bottom line continues to improve each quarter. The first quarter 09 results beat the same quarter of the previous year by 35.3%. That's an attractive increase for a company that reported an EPS of $.31 in the first quarter of 08. With a P/E ratio of 16.4, Plantronics almost seems like a "can't miss" recommendation. And if we spent a few more days analyzing the company and its product lines, we might be able to justify our hesitation. Chalk up our hesitation to completely endorse the stock to current market conditions and make Plantronics a part of your tech portfolio.