A research firm specializing in technology stocks told its clients Monday to avoid investing in some of the sector's biggest names.

In a series of notes describing the first half of 2009 as a "consumer ghost town," Broadpoint AmTech Inc. downgraded ten technology stocks, including Amazon.com Inc. (AMZN), Dell Inc. (DELL) and Cisco Systems Inc. (CSCO).

"While we realize that investors are aware that 'it's bad out there,' we are not sure they realize quite how bad," analyst Tim Boyd wrote in a research note. "The consumer has put on the brakes hard in January."

Boyd and other Broadpoint analysts drew their conclusions after attending the annual Consumer Electronics Show last week in Las Vegas. They reported that nearly every one of the more than 40 companies they met with at the show were "extremely bearish" in their near-term demand outlooks and said they were going to make cuts to their work forces.

The firm said it downgraded stocks where it felt that demand was "far from the bottom," and that face long-term trends that will hurt the value of the stocks through the recession. The firm downgraded to sell from neutral Dell, Garmin Ltd. (GRMN) and Nokia Corp. (NOK), and downgraded to neutral from buy Akamai Technologies Inc. (AKAM), Cisco Systems, and Marvell Technology Group Ltd. (MRVL).

Broadpoint AmTech also downgraded online retailers Amazon.com and Blue Nile Inc. (NILE) to sell from neutral, and Yahoo! Inc. (YHOO) and Bidz.com Inc. (BIDZ) to neutral from buy, based on what it said were unrealistic expectations and valuations.

Shares of all ten companies fell in recent trading, and underperformed the Morgan Stanley Technology Index, which declined 2.1%. Online auction retailer Bidz.com saw the largest percentage drop among the companies Broadpoint AmTech downgraded, declining 10.3% to $3.66 in recent trading.

Broadpoint AmTech also cut earnings forecasts already well below the Street's consensus for 20 companies, including Google Inc. (GOOG), Hewlett-Packard Co. (HPQ), Texas Instruments Inc. (TXN), Nuance Communications Inc. (NUAN), NVidia Corp. (NVDA), Seagate Technology Inc. (STX), Broadcom Corp. (BRCM), Atheros Communications Inc. (ATHR) and Motorola Inc. (MOT).

Another report Monday on the CES show, by Barclays Capital Research analyst Tim Luke, corroborated the bearish view of the Broadpoint AmTech analysts. "We found few key themes to inspire investors and consumers beyond well-previewed focus on netbooks and smartphones," Luke said.

Even the few bright spots in the technology sector, smartphones and netbooks, carried some troubling indications for other parts of the tech sector. Some of the established cell phone companies are struggling to keep up with the pace of innovation of the new smart-phone companies, Broadpoint AmTech analyst Mark McKechnie said. His downgrade of Nokia to sell was based in part on the company's "longer term issues in smart-phones."

And while netbooks were one of few hot products at the CES show, the analysts said netbooks are having a deflationary effect on the rest of the PC market. The trend toward netbooks and low-cost PCs will accelerate the declines in PC average selling prices, the firm said, and hurt gross margins as the premiums on full-sized PCs diminish.

Barclays analyst Ben Reitzes also pointed to the dark cloud behind the silver lining of netbooks. "It seems that netbooks are cannibalizing notebooks, rather than fully expanding the category as some have predicted," he said.

-By Ed Welsch, Dow Jones Newswires; 201-938-5244; edward.welsch@dowjones.com

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