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Tech Industry

Techs take a tumble

The tech-heavy Nasdaq closes below 1,900, reacting to cautious forecasts from Dell and Hewlett-Packard as well as downbeat economic news.

Cautious forecasts from two major manufacturers of computers and news of a growing U.S. trade gap sent technology stocks lower Friday.

The Nasdaq composite index fell 63.31 to 1,867.01, while the Dow Jones industrial average was off 151.74 to 10,240.78.

Dell on Thursday lowered its earnings projection for its third quarter and said it doesn't expect demand to rise before spring 2002. The view was largely echoed by Dell rival Hewlett-Packard.

Friday's economic news included the U.S. Commerce Department's monthly trade report, a widely watched monitor of trends in the overall trade balance. The commerce data showed exports and imports fell to levels not seen since early 2000, indicating further slowing in the global economy. According to the report, exports fell more sharply than imports, dipping to $85.95 billion. Imports of goods and services also fell to $115.36 billion.

The U.S. trade gap grew to $29.41 billion in June from a revised $28.47 billion in May. Sales of goods and services to major U.S. trading partners, such as Western Europe and Canada, dropped in the month. The gap was close to economists' expectations of $29.39 billion.

Dell's second quarter was in line with estimates, but the company said third-quarter sales will be flat to down 5 percent. Though analysts on Friday were praising the company for keeping a cautious stance, investors sent shares down $2.38, or 8 percent, to $23.

Hewlett-Packard on Thursday reported a sharp drop in third-quarter profits. Shares were off 8 cents to $24.05 after the computer and printer maker managed to inch past lowered estimates but said it doesn't expect sales to start growing yet.

CNET's PC Hardware index slid 2.7 percent.

Chipmakers also fell. Intel was the most actively traded stock on the Nasdaq, falling $2.09 to $28.07. CNET's Semiconductor index lost more than 6 percent.

Another actively traded loser was Scientific-Atlanta, which fell $3.77 to $21.24 after the company pulled its financial outlook for its current quarter and all of 2002. The maker of digital set-top boxes said its cable-company customers were slowing their installations.

Microsoft shed $2.74 to $61.88 as a federal appeals court said it rejected the software giant's plea to delay the proceedings against it while management continues to appeal an earlier ruling to the Supreme Court.

Among other heavily traded techs, Oracle fell 59 cents to $14.72, Cisco Systems slipped 87 cents to $16.61 and Sun Microsystems lost 68 cents to $14.03. rose 18 cents to $9.99, AOL Time Warner slid 35 cents to $39.70 and Yahoo lost 74 cents to $14.05.

Staff and Reuters contributed to this report.