Tech Industry

Techs dip on Enron, Excite@Home woes

A batch of optimistic reports about the economy couldn't help lift technology stocks.

Technology stocks stumbled Monday as upbeat news about the economy was unable to counteract the troubles of Enron and Excite@Home.

The Nasdaq lost 26.68 points to close at 1,904.90, and the Dow Jones industrial average was down 87.60 points to finish off at 8,763.96. CNET's technology indexes were mostly down with the exception of CNET's PC Software index. The broader markets continued to feel the fallout from energy giant Enron's bankruptcy filing.

In economic news, the National Association of Purchasing Managers (NAPM) report brought better-than-expected news about manufacturing activity. The NAPM factory index for November came in at 44.5--higher than October's 39.8 and stronger than the 41.7 that economists were expecting. The number still signals a contraction, however, as anything under a reading of 50 indicates a slowdown in manufacturing activity.

Construction activity was also stronger than expected. U.S. construction spending rose 1.9 percent in October to $863.5 billion, the government said, or 5.2 percent better than a year earlier.

The Commerce Department reported that consumers spent 2.9 percent more in October than in September, bringing spending to a seasonally adjusted annual rate of $7.19 trillion. Car sales helped boost the results, due to 0 percent financing offered by domestic carmakers, the report said.

The gains came despite the fact that most Americans' incomes were flat for a second straight month, according to a separate report from the Commerce Department. Incomes were flat in September and October after rising just 0.1 percent in August. That's the weakest performance since January 1994, when incomes shrank 3.9 percent.

In technology news, AOL Time Warner was off $1.32 to $33.58 as the company reportedly prepared its bid for AT&T's broadband unit. Comcast, which was also drawing an offer Sunday, was up 36 cents to $38.36.

AT&T shares fell 5 cents to $17.44. The company on Monday said it has moved to restore service to the 850,000 customers who lost high-speed Internet service this weekend when service to troubled Web access provider Excite@Home was shut down. AT&T also said Internet subscriber growth at AT&T Broadband would be hurt in the fourth quarter by problems with Excite@Home.

Oracle shares lost 33 cents to $13.70 after another senior executive announced his departure. The software maker said Executive Vice President Jay Nussbaum, who oversees sales, will be leaving in the coming weeks. He will be the fourth senior executive to leave Oracle in the last 18 months.

Shares of Micron Technology were up $1.40, or 5 percent, to $28.56 after confirmation that the computer memory chipmaker has been in talks to take over Korean company Hynix Semiconductor. The deal would combine the world's second- and third-ranked memory chipmakers and put them ahead of Samsung Electronics.

The news prompted Merrill Lynch's Christopher Shilakes to raise his estimate on the stock to "buy" from "accumulate." Though the nature of the deal is unknown, Shilakes speculated that Micron will most likely take over some of Hynix's more "advanced assets."

Other semiconductor stocks were lackluster despite news that chip sales increased in October. The Semiconductor Industry Association (SIA) said Monday that worldwide chip sales came in at $10.43 billion, a 2.5 percent increase from September's $10.18 billion figure. However, analysts said the industry has not recovered yet. Intel fell 62 cents to $32.04.

Sun Microsystems shares fell 74 cents to $13.50, adding to steep declines in CNET's Server Hardware index.

Among other actively traded shares, Cisco Systems lost 58 cents to $19.86 and Microsoft rose 56 cents to $64.77.

Yahoo rose 26 cents to $15.83 and Amazon.com was up 83 cents to $10.49.

Staff and Reuters contributed to this report.