In the last two months there has been a big change in how investors are viewing investing in technology companies. For most of 2013 and the first month or so of 2014 investors couldn’t get enough of what I like to call “new” technology companies. These are companies like Amazon, Twitter, Netflix, Facebook and others. In a way they aren’t really even technology companies other than the fact they use the internet to facilitate consumer commerce and communications.

Investor excitement about these fast growing firms drove them to very high prices and extreme valuations. It was a bit reminiscent of the 1999 to 2000 period where technology and dot.com companies were bid up to stratospheric valuations, which ultimately culminated with the NASDAQ market declining 80% in value when the bubble burst.

What seems different this time around is that the overvaluation seems to be confined to these new technology companies and is not widespread. Old technology companies even appear to be reasonably valued and some are making new 52 week highs, while the new tech companies are down 20 to 30 percent, or even more in some cases.

For example, the big three old technology companies - Apple, Intel and Microsoft trade at price to earnings ratios of 14, 14, and 15 respectively, while paying dividend yields of 2.3, 3.4, and 2.8 percent respectively. Amazon trades at a PE Ratio of 450 and Netflix at 160. Neither company pays a dividend to shareholders.

The problem with companies that trade at very high valuations is they need to continue to grow at very high rates so that the earnings of the company can justify such a lofty stock price. The reality of the situation is that growing at very high rates for many years just isn’t that easy. When the inevitable mistakes are made by management or the economy takes a turn for the worse, investors don’t hesitate to dump these high flying stocks. Prices can easily decline by more than 50%, a process which now appears to now be unfolding for the new tech sector.

The old tech companies can also decline in price in a general market correction, but with valuations much more modest, the floor would appear to be closer than for some of the high fliers. The payment of the cash dividend is also supportive of higher prices in the long run because most old tech companies are raising their dividend on a regular basis, just as Apple recently announced.

I think the time is right to own the older technology companies which continue to grow and pay rising dividends, rather than the over-valued new technology sectors.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.