The Worst Tech Stocks of 2019 – Barron’s

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This has been a rewarding year to be invested in technology stocks. The
S&P 500 Information Technology index
has rallied almost 48% year to date, well ahead of broader market measures, with the
S&P 500
itself up about 31%. But a few companies were left out of the party: Seven stocks in the 70-member S&P tech index are on track to finish 2019 in the red.

Here’s a look at what went wrong for this group in 2019.

• Cognizant Technology Solutions
  (ticker: CTSH), down 2%: Shares of the IT services provider hit the skids in May after the company reduced full-year guidance in the face of slowing business to both health-care and financial-services clients. Cognizant installed former Vodafone exec Brian Humphries as CEO on April 1; he is focused on reigniting revenue as the company refocuses on shifting to faster-growing, higher-margin businesses.
• Arista Networks
  (ANET), down 3%: The networking-equipment company’s shares lost ground after each of its past three earnings announcements. The latest hit, after Arista’s fiscal-third-quarter report in November, reflected the company’s warning that there had been a big drop-off in demand from a large “cloud titan” customer, widely believed to be
  Facebook
  (FB). The company’s highly concentrated customer base, with a particular focus on the cloud, remains a risk for Arista.
• Corning
  (GLW), down 4%: The high-tech specialty glass company has been hurt this year by a combination of slower smartphone sales, weaker sales of glass for TV displays, and softer spending on optical infrastructure by telecommunications carriers.
• Juniper Networks
  (JNPR), down 9%: The networking-equipment provider has been battered by a combination of market share losses to
  Cisco Systems
  (CSCO) and Arista and soft demand from both carriers and public cloud players. September-quarter revenues were down 4% year over year, hurt by softness in both carrier and enterprise spending.
• F5 Networks
  (FFIV), down 14%: F5, which provides application delivery controllers, has lately been shifting its business to be more focused on software than hardware—a transition that often disrupts financial performance. Earlier this month, F5 announced a $1 billion deal to acquire Shape Security, a transaction it expects to accelerate a shift to a subscription software model. But the company is leveraging up to do the deal, and the stock lost ground on the news.
• Alliance Data Systems
  (ADS), down 26%: It’s been a rough year for the highly leveraged private-label credit-card issuer. The company recently reduced full-year guidance and changed CEOs.
• DXC Technology
  (DXC), down 29%: DXC, founded in 2017 via the combination of
  Hewlett Packard Enterprise’s
  (HPE) service business with Computer Sciences, has the dubious distinction of being the year’s worst-performing tech stock in the S&P 500. The company’s newly installed CEO, Accenture veteran Mike Salvino, recently slashed DXC’s revenue and profit outlook, citing a combination of lost and delayed deals and execution issues. DXC has announced plans to sell or spin off three units that together account for 25% of the company’s revenue—and to use proceeds to return cash to holders via buybacks or share repurchases.

Write to Eric J. Savitz at eric.savitz@barrons.com