Profit worries keep techs down

Technology issues slip as Wall Street weighs in with worries about upcoming earnings reports and the U.S. retaliation against Afghanistan.

Larry Dignan
3 min read
Technology issues slipped Tuesday as Wall Street weighed in with worries about upcoming earnings reports and the U.S. retaliation against Afghanistan.

The Nasdaq composite index fell 35.76 points to close at 1,570.19. Blue chips also slipped, with the Dow Jones industrial average losing 15.50 points to 9,052.44.

On the economic front, U.S. retail sales at discount, chain and department stores fell during the five weeks ended Oct. 6 as consumers pulled back on spending after the Sept. 11 terrorist attacks, Instinet Research reported in its weekly Redbook Retail Sales Average.

The report, which covered the period two weeks before and three weeks after the Sept. 11 attacks, showed the Redbook Retail Sales Average fell 2.5 percent compared with August.

The markets remained jittery following the second day of U.S. attacks on Afghanistan, but many analysts were focused on the tech sector. Motorola will report earnings Tuesday followed by Yahoo on Wednesday and Juniper Networks on Thursday.

Investors were also focused on shares of Microsoft, which fell on word that the U.S. Supreme Court refused to hear its antitrust trial. Shares were down $3.48, or 6 percent, to $54.56.

Motorola was weak ahead of its third-quarter results, falling 67 cents, or 3.85 percent, to $16.72. The company is expected to lose 7 cents a share. Motorola will hold its conference call early Wednesday morning.

Trading of tech stocks was also subdued by a host of research reports.

Storage stocks such as EMC, IBM, Brocade Communications Systems and Hewlett-Packard were mixed after a research report from Goldman Sachs that concluded that demand for enterprise hardware wouldn't improve anytime soon.

"The fact that the economy is moving into recession just when IT spending budgets are being formulated is a bad sign for 2002 spending plans, at least in the first half of the year," said Goldman analyst Laura Conigliaro, who added that business models "will not return to heyday form."

In the long run, Conigliaro said she favored leaders such as Sun Microsystems and IBM. Sun fell 53 cents to $9.07, and IBM lost $1.36 cents to $97.14.

Chip-equipment stocks were also weak after Merrill Lynch cut earnings estimates for a host of semiconductor-equipment companies. Merrill said chip-equipment spending would remain weak, and spending in 2002 could fall 15 percent to 20 percent.

Shares of Applied Materials were down $2.71, or 8 percent, to $31.15, and Novellus Systems lost $2.64, or more than 8 percent, to $27.77.

Internet issues also slumped ahead of Yahoo's third-quarter earnings results Wednesday. According to First Call, Yahoo is expected to report a profit of a penny a share on sales of $170.5 million. Wall Street will also be looking to gauge Terry Semel's first quarter as CEO.

Shares of Yahoo fell 33 cents to $10.16, and AOL Time Warner gained 25 cents to $32. "Fundamentals for most Internet companies continued to deteriorate in the third quarter along with advertising spending, consumer spending and the economy," Merrill Lynch analyst Henry Blodget wrote in a research note.

Blodget said eBay, down $1.03 to $54.39, was the strongest of the Internet bunch.

Among other notable tech stocks, shares of Cisco Systems fell 46 cents to $14.59; Intel was off 79 cents to 21.45; and Dell Computer slipped 47 cents to $22.65.

Staff and Reuters contributed to this report.