Here are the highlights of  Nomura's 2010 Euro Tech Outlook:

 
- The sector is likely to track the wider market in 2010. 
- Software offers the most consistent growth opportunities but in many cases has the valuation to match.
- Semiconductors should benefit from ongoing demand recovery, lean inventories, PC recovery and a good outlook for memory. 
- Communications equipment is likely to be the laggard with handsets looking a little better, but the outlook for network infrastructure remaining depressed. 
- However, Professional services is still looking strong, a positive for Ericsson. 
- On the flip side, the outlook for Alcatel-Lucent is deteriorating and 5% margins is pretty much all the company can expect.

Software:
- Software has the best long-term growth rates but at the same time remains the most expensive part of European tech. 
- Within the sector there are some stocks that are cheaper than others . Here are a few options. 
- 1) Slower growth at a cheap valuation - Sage
- 2) Some growth and a big strong company - SAP
- 3) Fast growth, high valuation but upside to estimates - Autonomy. 

Semiconductors:
- Nomura's research team in Asia is now much more bullish in demand for PCs and consequently the outlook for memory (DRAM and NAND). 
-There is still plenty of upside in STM and ASML. 

Communications Equipment:   
- Communications equipment looks like it will continue to lag as a sub sector offering growth opportunities. 
-  Handset estimates have been upgraded to 10% growth
- Infrastructure is also likely to continue to lag but there is a real growth opportunity in professional services. 
- Ericsson is by far the most exposed, with one of the cheapest valuations and most upside. 
- Nokia is likely to really run, if it sorts its handset software problems out ,but not until the second half of the year at the earliest. 
- On the flip side, the outlook for Alcatel-Lucent is deteriorating , 5% margins is pretty much all the company can expect.