Warnings drag markets lower
Earnings warnings continue to weigh on tech shares and the broader markets Thursday.
The Nasdaq composite index fell 51.44 to 3,471.66, while the Standard & Poor's 500 index inched up 1.89 to 1,436.21.
The Dow Jones industrial average fell 60.30 to close at 10,724.18.
"I'm surprised that the market couldn't sustain itself from yesterday," said Kathy Taylor, a trader at A.G. Edwards. The Nasdaq and Dow each rose about 60 points Wednesday.
"In general it was a rough tape today," said Bryan Piskorowski, a market strategist at Prudential. "It's a market that is unwilling to take a stand."
Dell Computer announced Wednesday after the markets closed that it expects revenue for the third quarter to be softer than expected.
The Round Rock, Texas-based company said that revenue will grow only 7 percent to approximately $8.2 billion because of slow sales in Europe. About a month ago, the direct seller of personal computers said it expected to see revenue growth for its third quarter closer to 10 percent.
Dell stock fell $3, or nearly 11 percent, to $25.19, and shares in other PC makers also dipped. Compaq Computer fell $3.74, or about 13 percent, to $25.10; Gateway dropped $2.77 to $49.13; Hewlett-Packard led the Dow lower, slipping $7.38 to $88.25; and Apple Computer dipped $1.56 to $22.06.
"I think the group as a whole is bracing for a slowdown in PC (sales)," said Piskorowski, adding that the markets might be able to rise if earnings season brings investors some good news.
Large cap stocks also lost ground. At the end of regular trading, Intel closed down $1 at $41; Microsoft slipped 63 cents to $55.38; Cisco Systems lost $1 to $57.56; and WorldCom fell $2.25 to $25.94.
Shares of Nextel Communications fell $5.38, or 12 percent, to $38.44. The company reported that it added 540,000 subscribers in the third quarter. Reuters reported that the company fell short of Wall Street expectations of 550,000.
The CNET tech index lost 23.57 to close at 2,807.57. Losers triumphed over winners, with 64 of the 97 stocks in the index falling, 32 rising and one remaining unchanged.
Of the 18 sectors tracked by CNET Investor, PC-hardware makers posted the sharpest drops, falling 5 percent. Internet content companies were the day's largest gainers, climbing nearly 3 percent.
The earnings news was also not favorable for Harmonic. The company's shares fell $9.88, or 43 percent, to $12.94 after the maker of equipment used for Internet connections over cable lines said it will report a third-quarter loss on lower sales.
An earnings warning also punished shares of Breakaway Solutions. The Internet consulting firm fell $2.94, or 39 percent, to $4.56 after announcing lower-than-expected earnings and revenue for the third quarter.
Shares of Priceline.com fell $3.56, or 38 percent, to $5.81 after one of its affiliates announced that it will close its doors. WebHouse Club, a service that offers a name-your-price gasoline and grocery service, said it will shut down because of an inability to raise capital to complete its business plan and achieve profitability.
Other Internet companies also lost ground. Internet incubators CMGI fell $2.81, or nearly 12 percent, to $21.50 and Internet Capital Group dropped $3.31, or 21 percent, to $12.38. Amazon.com slipped $2.44 to $33.56; eBay dipped 75 cents to $63.88; and Yahoo dropped $3.25 to $84.89.
Chip stocks took a dip. The Philadelphia semiconductor index fell 26.40, or 3 percent, to 836.66 led by chipmaker Micron Technology, which lost $5.94, or nearly 13 percent, to $41.
Micron announced fiscal fourth-quarter earnings Wednesday, and posted a profit on higher PC demand and falling production costs. But the company's shares fell because some analysts cut Micron's profit forecasts.