Sonny, here is something for your to read, just in case yo havn't seen it yet! I believe the disappointment with Motorola was just another excuse, as this market was ripe to plunge for various reasons that we can only guess at. (Maybe we should sue Motorola and Mr. Galvin too? ggg)
I don't own Motorola any more, I got rid of it and bought Ericy at 22 and change, sometimes ago. I don't believe cel phone sector is in crisis, as Ericy and Nokia are both thrieving and have not warned. I beleive MOT has a problem, there product line! Compairng to Ericy and Nokia, they have
few products and their market in Europe is beig eaten up by the above two company. If you remember the shares were at 80 dollars and change in 1996! They dropped to the low 50's over the next four years and only in 99 the company began to show any signs of life. So there we are again, one step forward and one back!
IN THIS ISSUE . . .
* MarketRap
Earnings woes sink the Nasdaq
A disappointing outlook from Motorola set the stage for tech weakness; the Dow rallied. Behind the biotech selloff, and Old Economy winners.
by Amy Feldman
ANOTHER DAY, ANOTHER NASDAQ DECLINE. It wasn't as heart-wrenching a decline as the Nasdaq's whopping 349-point drop last Tuesday, or even its 258-point decline yesterday, but today's tumble pushed the tech-heavy index into bear market territory. Yes, the bellwether technology index closed down 132 points (or 3.2%) at 4,055, leaving it 19.7% from its high of 5,048, hit just one month ago. Call it 20%, and it's right at the widely accepted bear-market benchmark.
For optimists, there's a bright side (sort of): The Nasdaq is roughly even for the year. And given investors' penchant for buying on the dips (the index has rocketed more than 400 points from its low last Tuesday), tomorrow could very well be a big up day. That's what optimists would say, anyway.
Among the catalysts for today's Nasdaq plunge: A selloff in computer and telecomm stocks sparked by projections of future weakness at Motorola [MOT], which is not in the index, and disappointing earnings from biotech player Biogen [BGEN], which is.
Bucking the tech selloff was the old-line Dow Jones industrial average. It gained 100 points, or 0.9%, to 11,287. Is tech dead? Is value back? Stay tuned.
WATCHING MOTOROLA. So much for optimism over the wireless firm's first-quarter earnings, which were a smidge above Wall Street expectations. In a conference call today Motorola [MOT], whose turnaround has been widely watched by Wall Street, forecast tough times ahead. Second-quarter earnings will be light because of narrowing profit margins, the result of price-cutting to compete with cell-phone leader Nokia.
The news not only sent Motorola's shares down $27.69, to $122.56, but also hurt competitors. Nokia [NOK] fell $1.31, to $53.44, and Ericcson [ERICY] dipped $1.13, to $86.38. For Motorola, the selloff wiped nearly $19 billion off its market cap. Is it time to buy or to sell? Michael Sivy makes the bullish case in "Motorola gets walloped" [ money.com ] . In another positive sign for the industry (no surprise to us cell-phone addicts), an industry trade group reported that the number of total users of wireless services rose 24% last year, to 86 million.
BYE-BYE BIOTECH. Biogen reported lousy first-quarter earnings, at 41 cents a share, or two cents less than expectations, sending the sector into a tizzy. One big problem for Biogen was Avonex, its top-selling multiple sclerosis drug, which, well, just didn't sell as well as anyone figured it would. Biogen shares tumbled $13.13, to $51.88.
The real blame, however, may be the earlier irrational exuberance, if you will, of biotech stocks. The Nasdaq Biotechnology index had more than doubled in just three months, but fell into a slump on March 6th. As Biogen president James Mullen said today on CNNfn: "There was a pretty exuberant run-up of the whole marketplace early this year and that's really pulled back." Wall Street's take: Biogen's travails could be a warning sign that other biotechs will post weak results.
Hit even harder than Biogen was ViroPharma [VPHM], which had been working on a cure for the common cold. Problem is, ViroPharma can't get its drug, called pleconaril, to work. The company reported that in three separate clinical trials, the drug failed to reduce the duration of colds any more than a placebo. Shares plunged $48.50, to $23.25. |
