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Tech Industry

MARKET CLOSE: Tech stocks retreat

    Technology stocks gave back Monday's gains and then some Tuesday after a pair of ominous economic reports hit Wall Street. The Nasdaq composite closed off 101 points to 2,207.79, while the Dow fell 6 points to finish at 10,636.95.

    Consumer confidence slumped in February to its lowest level in over four and a half years, signaling a severe economic downturn ahead, the Conference Board said Tuesday.

    The consumer confidence index was down for the fifth straight month to 106.8 from a revised 115.7 reading in January.

    Meanwhile, new orders for U.S. manufactured goods also tumbled in January, reflecting a huge drop in orders for commercial aircraft and parts. The value of new orders for all types of long-lasting durable goods--ranging from refrigerators to airplanes--plunged 6 percent to a seasonally adjusted $202.02 billion last month, the Commerce Department said.

    Both reports increase the probability of a sharp cut in short-term interest rates, possibly ahead of the Federal Reserve Board's scheduled meeting on March 20--a move that investors would welcome.

    But investors kept selling as the magnitude of this economic slowdown continued to sink in.

    "These numbers are real negative, even the housing market has collapsed and also consumer confidence is negative," said Peter Cardillo, director of research at Westfalia Investments. "Once reality sets in, we have to realize that perhaps total recession is upon us, instead of pockets of recession, and of course what does that mean for growth and corporate profit growth going forward?"

    Speaking of corporate profits, investors were nervous about Gateway's (NYSE: GTW) outlook ahead of the company's analyst meeting. Shares of the PC maker fell $1.09 to $16.72, as Merrill Lynch downgraded the stock and said the company would probably lower expectations.

    Other PC stocks fell in sympathy as Apple Computer (Nasdaq: AAPL) lost 13 cents to $19.38, while Dell (Nasdaq: DELL) and Compaq (NYSE: CPQ) shaved off 56 cents and 75 cents a share, respectively.

    Shares in i2 Technologies (Nasdaq: ITWO) plunged $7.94 to $27.56 after Nike implicated the company in its third-quarter revenue miss, claiming its supply-chain management software wasn't up to par.

    Sawtek (Nasdaq: SAWS) added 6 cents to close at $17.13 after it lowered earnings and revenue targets for its second quarter. Analysts cut estimates but maintained their respective ratings.

    Microsoft (Nasdaq: MSFT) lost 19 cents to end at $59.38 after Goldman Sachs trimmed its third-quarter sales targets. Oracle (Nasdaq: ORCL), which had its sales estimates reduced by a pair of brokerage firms, closed off $1.50 to $21.69, and Sun Microsystems (Nasdaq: SUNW) finished off 94 cents to $19.81.

    Yahoo (Nasdaq: YHOO) slid $2.31 to $23.44. America Online Time Warner (NYSE: AOL) sawed off $1.42 to $44.70, while Amazon.com (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) lost 19 cents and $3.25 a share, respectively. CMGI (Nasdaq: CMGI) dipped 59 cents to finish at $4.06.

    Prodigy Communications (Nasdaq: PRGY) beat analysts' estimates in its fourth quarter but saw its losses more than double from a year earlier. Shares of the Internet service provider closed off 6 cents to $2.88.

    Cable television company Mediacom Communications (Nasdaq: MCCC), up $1.25 to $19, has agreed to pay about $2.22 billion in cash for AT&T Broadband cable systems in Georgia, Illinois, Iowa and Missouri, doubling its size, the companies said on Tuesday. AT&T (NYSE: T) shares gained $1.07 to $22.91.

    Among widely held network-equipment stocks, Cisco Systems (Nasdaq: CSCO) fell $2.06 to a 52-week low of $24; Nortel Networks (NYSE: NT) dropped 60 cents to $18.28 and Lucent Technologies (NYSE: LU) slipped 48 cents to $12.11.

    Intel (Nasdaq: INTC) clipped 50 cents to $29 while IBM (NYSE: IBM) and Advanced Micro Devices (NYSE: AMD) closed off 83 cents and $2.71 a share, respectively.

    ZDII staff and Reuters contributed to this roundup.