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Techs dip on sour outlook for year

Technology stocks slouch as analysts say the technology sector is likely to continue its downturn until this time next year.

Technology stocks slouched Monday as analysts said the whole sector was likely to continue its downturn until this time next year.

The Nasdaq composite index fell 11.23 points to 2,017.84, and the Dow Jones industrial average dropped 14.95 points to 10,401.72.

"The much-anticipated recovery in technology earnings is very unlikely to occur during the second half of this year. I expect it won?t start until the second quarter of next year," wrote Deutsche Banc Alex Brown analyst Edward Yardeni in a research note Monday.

Analysts lowered their estimates for Standard & Poor's 500 stocks Monday, highlighting expectations for bad performance in the technology sector, which saw earnings down 65 percent in the second quarter, compared with an 8.2 percent decline for the nontech portion of the S&P 500.

The breakneck speed of the sector?s previous expansion was blamed for the inventory glut and overcapacity, which analysts say will make the technology sector worse off in the current downturn.

"The lethal combination of rapidly expanding capacity and an abrupt downturn in demand has caused the tech sector to shift from 36 percent year-on-year earnings growth in the first three quarters of 2000 to a 65 percent decline in the second quarter of 2001," wrote UBS Warburg analyst Edward Kerschner.

The analysts were basing their results on the 80 percent of S&P 500 companies that have already posted their results for the second quarter.

The S&P 500 index was down 1.30 to 1,204.52.

The wireless sector was one of the tech sector?s few bright spots. Shares in companies like Openwave Systems, up 64 cents to $25.63, and Ericsson, up 45 cents to $5.30, got a boost Monday after a few analysts said the sector could be due for a rally.

CNET?s Wireless index was up almost 4 percent.

Adobe Systems, down $2.52 to $40.54, said it should match its targets for third-quarter earnings but warned that sales could fall short. The maker of publishing software said its previous goal of flat year-over-year revenue has been nixed.

Among technology bellwethers, Microsoft rose 33 cents to $65.80, Oracle lost 39 cents to $18.67, Cisco Systems lost 17 cents to $18.89, and Intel fell 18 cents to $29.04. Sun Microsystems was one of the Nasdaq?s biggest volume decliners, down 77 cents to $15.52. rose 30 cents to $12.55, AOL Time Warner rose a penny to $45.15 and Yahoo fell 22 cents to $17.80.

Staff and Reuters contributed to this report.