Conventional wisdom says that technology stocks are underperforming this year because of weak performance from large caps like Apple (NasdaqGS:AAPL) and Hewlett-Packard (HP). But that's only part of the story.

Thus far, 22 of the 40 worst performing stocks on earnings report days are technology stocks, according to Bespoke Investment Group.

Among the worst drops, are Brightcove (NasdaqGS:BCOV) and DragonWave (NasdaqGS:DRWI) which each fell more than 27% on the day they reported earnings. Earnings guidance for the technology sector has been lower too. Even with decelerating earnings, there are bright spots.

Small cap technology stocks inside the PowerShares S&P SmallCap Information Technology Portfolio (NasdaqGM:PSCT) have handedly beaten S&P 500 technology stocks (XLK) by a wide margin. Over the past six months, PSCT (small cap tech) has gained almost 11% while XLK (large cap tech) has lost 0.97%.

Small cap stocks are generally categorized as companies with a market size between $250 million up to $5 billion. The average market size for stocks within PSCT is $1.1 billion.  Around 25% of the stocks inside PSCT are in the semiconductor sector, 23.5% electronic components, and 20.7% software.


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