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Tech Industry

Chip, networking stocks dent markets

The Dow Jones industrial average and Nasdaq close lower after a trio of profit warnings.

Semiconductor and networking stocks took the wind out of the markets Monday as the Dow Jones industrial average and Nasdaq closed lower.

The Nasdaq lost 44.32 points, or 2 percent, to close at 2,170.78, and the Dow Jones industrial average lost 54.91 to close at 10,922.09.

With a dearth of economic and earnings news Monday, trading volume was light.

Prudential Securities analyst Ed Keon predicted it will be 2003 or later before technology companies regain the earnings momentum they had before the dot-com crash. On the bright side, Keon predicted strong earnings growth of 13.7 percent for the decade.

But that long-term outlook didn't do wonders for investors, who were focused on Monday's batch of profit warnings.

The semiconductor sector was rattled after a trio of profit warnings. The CNET semiconductor index was down nearly 3 percent, and the semiconductor capital equipment index fell more than 3 percent.

DuPont Photomasks, which makes technology used to produce semiconductors, warned that fourth-quarter results would miss Wall Street estimates. Its shares fell $6.03 to $45.97, or 11 percent.

Varian Semiconductor, another chip-equipment maker, warned of problems as well, saying its revenue would fall 30 percent to 35 percent, worse than previously predicted. Varian also announced that it cut its work force by 20 percent and plans a two-week plant shutdown in July. Its stock was off $3.22 to $39.25.

Alliance Semiconductor reduced its revenue outlook for the first quarter, citing weak demand for memory, but said it might see an improved second quarter. Shares were up 3 cents to $13.38.

Other chipmakers were generally sluggish. Intel was off 34 cents to $30.33, Advanced Micro Devices lost $1.05 to $30.05, and Texas Instruments slid $1.18 to $36.81.

Networking and telecommunications-equipment stocks also continued to struggle after Friday's profit warning from Juniper Networks. Shares of Cisco Systems slipped 11 cents to $20.38, Juniper dropped $2.69 to $35.33, and Lucent Technologies lost 36 cents to $8.04. The CNET Telecom Equipment index fell more than 4 percent and the networking index dropped more than 2 percent.

The shares of several contract electronic-manufacturing companies dropped after a report from Merrill Lynch. The brokerage firm downgraded Celestica, off $3.50 to $48.60; Jabil Circuit, off $2.76 to $27.75; Sanmina, down $1.82 to $25.08; Solectron, which lost $1.77 to $20.98; and Flextronics, off $1.90 to $25.41.

Among other notable movers, Peregrine Systems acquired Remedy, which makes customer-relationship management software, in a cash and stock deal valued around $1.08 billion. Peregrine develops inventory management and purchasing software; it plans to fold Remedy's software into its own products. The news sent Remedy's stock surging $12.18 to $30.52, or 66 percent. But Peregrine investors were not as pleased; its stock sank $3.30 to $25.51, or 11 percent.

Services company Perot Systems said second-quarter revenue should be in line with Wall Street expectations. That's pretty good news for a services company, considering many have been forced to lay off staff and reduce expectations amid a slowdown in tech spending. Perot was up 17 cents to $15.32.

Staff and Reuters contributed to this report.