4 Sell And 1 Buy Ideas From Top Underperforming Tech Stocks

BCE is Canada's leading telecommunications company, with a dominant position in traditional telecom services in eastern Canada, the second largest national wireless operation and a growing TV/video delivery business.

BCE recently reported mixed Q4 2011 results with earnings in line with consensus and an EPS of $0.62 against consensus estimates of $0.65. Its wireline segment's performance was particularly negative with 4% y-y decline in earnings driven by market share decline in access lines and weak growth in data and TC adds. Its wireless segment posted good revenue growth driven by more post-paid adds and smart phone upgrades. Nevertheless, going forward, the competitive environment in wireless is set to be challenging, with increased competition from new entrants.

The declining wireline business

Given the declining wireline business and competitive threats in the wireless business, I don't see any prospects of nearly term upside in the stock and would recommend selling it.

Chunghwa Telecom is Taiwan's incumbent integrated telecom operator. It provides local, long-distance and international calling, 2G GSM and 3G WCDMA mobile services, data and broadband internet services, satellite communication, corporate and enterprise solution services.

CHT completely dominates fixed line and broadband markets in Taiwan, with about 95% and 82% market share respectively. Its market dominance is the key reason I am wary of the stock. On the one hand, its current dominance makes it difficult for it to expand market share. On the other, it is as well making it prone to competitive and regulatory headwinds. From the competitive perspective, cable operators have recently launched promotions for high speed broadband competing with CHT's 20Mbps and 50Mbps. On the regulatory side, it is facing risks in the form of Mandatory Tariff Reduction and Single Nationwide Fixed Call Tariff. Both these factors can cause severe pricing pressure and margin reduction for CHT.

The opportunities space for CHT is not empty

While the opportunities space for CHT is not empty, they require higher Opex and Capex. As well, with CHT's latest investment in China Airlines, there is negative sentiment in the market regarding management's use of excess cash in non-core business investments. With its trading multiple close to historical highs, I believe there is little room for price appreciation in the nearly term and would recommend selling it.

Groupon is my third sell recommendation in the above list. Groupon is facing stiff competition and burning significant amounts of cash. The business has relatively low barriers to entry, and at a market cap of $14 billion, investors are obviously pricing in too many positive expectations for a company in other words hardly making any profits.

The only stock in the above list which I

Google is the only stock in the above list which I would recommend going long on. Google is a defensive stock with high growth rate. The company's leadership position in its core search business is what makes it a defensive stock. Its main competitors, Bing and Yahoo Search, have been unable to pose any meaningful threat to Google-- in spite of burning a good amount of cash. From a growth perspective, Google is likely to post a double digit growth rate for the at once several years as a secular shift of advertisers from traditional media to online media continues. Its mobile business is likely to be another major growth driver.

Google is trading at a forward PE of just 12x, in spite of the expected 20% top and bottom-line growth then and there year. Even though some investors are worried about increasing dominance of Facebook, I think it's too premature to say that Facebook can adversely affect Google's core search and advertising business. I find the risk-reward profile of Google very attractive at these levels.