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Nortel, JDS Uniphase warnings rattle techs

The latest round of profit warnings from the telecommunications sector has the Dow and Nasdaq set to open lower.

Profit warnings from Nortel Networks and JDS Uniphase are likely to push technology stocks lower Friday. The Dow and Nasdaq are set to open lower.

The collapse of the General Electric-Honeywell merger may also have a dampening effect on blue chips. The broader markets will also have a slew of economic news to mull over.

The Consumer Price Index is the day's big economic news. The CPI, the most widely cited inflation indicator, is expected to show a 0.4 percent gain for May, after a 0.3 percent rise in April. The core rate, excluding food and energy, is predicted to have risen 0.2 percent, the same rate of increase as the previous month.

The Federal Reserve will report on industrial production, which is expected to fall 0.3 percent for May after an identical drop in April. The University of Michigan's revised report on June consumer sentiment will also come out. It's expected to have declined to 91 percent from 92 percent in May.

Stocks to watch
•  Nortel said Friday it will report a much larger-than-expected loss in the second quarter and lay off an additional 10,000 workers. The telecommunications equipment maker said it will report a loss from operations of 48 cents a share on sales of about $4.5 billion. According to First Call, Nortel was expected to report a loss of 6 cents a share on revenue of $6.22 billion.

•  JDS, which counts Nortel as a big customer, was also hit hard by the ongoing telecom spending slump. The supplier of fiber-optic components said Thursday it expects to post a loss on lower than expected revenue. JDS now sees sales for the fourth quarter ending June 30 at $600 million, below the company's earlier estimate of $700 million. Shares were down 13 percent in premarket trading, falling $1.91 to $12.27.

•  Adobe Systems said net income for the second quarter ended June 1 was 25 cents a share. Excluding acquisition costs and investment losses, the maker of graphics and publishing software said profit would have been 34 cents, topping the average estimate of analysts polled by First Call. During a conference call with analysts, executives also said European sluggishness will keep its third-quarter revenue roughly the same as it was a year ago, when the company reported revenue of $328.9 million.

•  First Data, a processor of credit-card payments agreed to take majority ownership in NYCE, the operator of New York City's largest automated teller machine network. Terms of the transaction, which is expected to close within six months, weren't disclosed.

•  IDT reported a net loss of 73 cents a share for its third quarter ended April 30, compared with profit of $1.66 a year ago. The long-distance service provider had been expected to lose 56 cents a share according to First Call's consensus estimate.

Reuters and staff contributed to this report.