Foreign markets in Compaq wake

Markets around the globe are, again, surfing the wake of yet another profit warning from a U.S. high-tech company.

But the after-hours profit warning from U.S. computer maker Compaq Computer (CPQ) doesn't seem to be pummeling foreign markets the way Intel's announcement did last week.

London was one of the few markets feeling a sting, as the warning sent prices of U.S. stocks reeling today, traders said.

"The main focus is on Compaq," one London trader said. "There's a lot of negative sentiment in the tech sector, especially in semiconductors after recent earnings warnings."

In Finland, however, the profit warning from Compaq had less impact than feared. Shares rose more than 1 percent in early morning trading in Helsinki, with the market taking its cue not from Compaq, but from Friday's gains in U.S. stocks and the stronger dollar, brokers said.

Taiwan also seemed to shrug off the warning. Though the electronics sector fell 2.39 percent after Compaq's gloomy forecast, the market as a whole closed up 36.62 points today.

"The performance of PC-related shares will remain weak as many investors expect more PC-related firms in the United States to announce earnings-slowing signs in coming days," HSBC James Capel reasearch manager Alex Chen said.

Despite plunging share prices in the electronics sector and a wary watch for similar announcements from other U.S. computer-related firms, brokers said there is limited room for Taiwan's electronics to fall.

"Local PC-related firms should show second-half sales rising 50 percent over the first half as Asia's financial crisis gradually eases and Windows 98 is introduced," Chen said.

The United Kingdom's FTSE 100 index was flat this morning as investors' nerves were tested and all eyes focused on how the United States market would react to Compaq's news.

The top 100 share index was up some 36 points, but the shares quickly came off their highs as investors were reluctant to commit themselves ahead of Wall Street's opening this morning.

"It's all eyes on Wall Street," said one sales trader at a leading investment bank. "The market is concerned with what New York is going to do after the Compaq earnings warning."

Yet, in New York, Bear Stearns said this morning that it would keep its "buy" ratings on shares of both Compaq and Dell (DELL), despite Friday's announcement.

Compaq said on Friday that it expected its first-quarter earnings to be far below Wall Street estimates because of weak personal computer demand and dropping prices.

The announcement came hot on the heels of earnings warnings from semiconductor giant Intel (INTC) and electronics firm Motorola (MOT), sparking fears about the technology sector as a whole.

However, Dell said it had been largely immune from a sales slowdown cited by Compaq, and noted that that, apart from normal seasonal fluctuations in sales, it was seeing "business as usual."

Intel was down 1 at 77-1/8, Microsoft (MSFT) was quoted 2-3/4 lower at 81, and IBM (IBM) was marked down 1-3/8 at 97.

"The Compaq news could weigh down the market initially, but...people may see this as a buying opportunity for tech stocks," one trader said. "These are names people like holding."

Reuters contributed to this report.