| By Robert O'Brien Dow Jones Newswires
NEW YORK Disappointing profit forecasts from several bellwether hightechnology companies dashed hopes for an imminent recovery in the sector's earnings, hurting stocks' performance.
Ciena shares fell $3.03, or 17%, to $14.94 on Nasdaq, wiping out all of the ground it had gained during the past two months. The decline c ame after the telecommunicationsequipment maker said sales in its fiscal first quarter will fall sharply from fiscal fourthquarter totals and miss Wall Street's forecasts by a wide margin.
At the same time, Lucent Technologies upset Wall Street with forecasts that its fiscal firstquarter sales for the period ending in December would miss analysts' forecasts by as much as $1.3 billion. Lucent shares fell 1.21, or 16%, to 6.52.
Qwest Communications, the telecomservices provider, and one of the biggest consumers of communications capital equipment, said it wouldn't be buying nearly as much gear from equipment makers as it previously anticipated. Qwest shares fell 30 cents, or 2.5%, to 11.80.
The forecasts spelled trouble for a broad array of companies that sell telecommunications gear, as well as the vendors and suppliers that provide parts and services to that industry. Cisco Systems fell 1.49, or 7.3%, to 19.01; Tellabs fell 1.74, or 11%, to 14.35; ONI Systems fell 94 cents, or 12%, to 6.61; and Broadcom dropped 3.48, or 7.6%, to 42.47, all on Nasdaq.
Communicationschip maker PMCSierra (Nasdaq) fell 4.63, or 17%, to 23.39, while rival Vitesse Semiconductor (Nasdaq) fell 1.92, or 13%, to 12.65. Among contractelectronics manufacturers , Jabil Circuit fell 2.29, or 7.6%, to 27.91; Celestica fell 3.99, or 8.4%, to 43.78; and Sanmina Holdings (Nasdaq) fell 2.91, or 12%, to 21.99.
The Nasdaq Composite Index finished at 1946.51, down 64.87, or 3.23%, its worst oneday decline since Oct. 29. The Dow Jones Industrial Average ended at 9766.45, down 128.36, or 1.3%.
While yesterday's developments didn't dash the prospects of a recovery, market participants said they did remind investors that the transition won't be painless.
"Investors got a little too brave a little too fast, and today's developments snap us back into some type of sobriety," said Joseph Besecker, chief executive at Emerald Asset Management. "But I don't think this is a mortal blow, by any means. In fact, I think we still have the wind at our backs."
Caution on the profit outlook wasn't limited to the tech area yesterday. Shares of USXU.S. Steel fell 85 cents, or 4.7%, to 17.11, after the steelmaker said orders for fourthquarter steel shipments have trailed well below the rate of the third.Shares of other steelmakers also traded lower. Nucor fell 2.07, or 4%, to 49.08, while AK Steel fell 99 cents, or 8.1%, to 11.27.
Other metals makers declined: Alcoa fell 1.55, or 4.1%, to 36.27. Commodities makers struggled, as chemicals maker DuPont fell 1.48, or 3.4%, to 41.52, and Dow Chemical fell 1.14, or 3.1%, to 35.25.
Economic data released before the session showed that retail sales, which had surged in October on the strength of an expansion in auto sales, fell back in November, disappointing economists who were looking for sales trends to steady.
Shares of auto maker General Motors fell 1.23, or 2.5%, to 47.33, while Ford Motor fell 48 cents, or 2.9%, to 16.17.
Meanwhile, WalMart Stores fell 97 cents, or 1.8%, to 53.36, Kohl's fell 73 cents, or 1.1%, to 68.02 and online retailer Amazon.com fell 1.02, or 8.6%, to 10.89.
Some strength was in evidence yesterday. United Technologies, for example, rose 1.15, or 1.9%, to 60.65, after the industrial company said it should beat analysts' estimates for next year, despite a tough climate in some of its businesses.
H.J. Heinz rose 1.16, or 3%, to 39.50, after the food maker reported that its fiscal secondquarter earnings met Wall Street's projections and affirmed the earnings forecast for the current quarter.
W.W. Grainger fell 1.30, or 2.8%, to 45.55. Lehman Brothers reduced its rating on the Chicago distributor of maintenance products, citing the company's exposure to the slowing economy.
Yahoo (Nasdaq) fell 1.56, or 8.2%, to 17.58. The Web portal offered to buy the HotJobs helpwanted Web site for $436 million in cash and stock, topping a friendly allstock bid by TMP Worldwide. TMP (Nasdaq) fell 3.28, or 7.3%, to 41.77. HotJobs (Nasdaq), rose 3.83, or 59%, to 10.30.
Jack Henry (Nasdaq) fell 3.07, or 13%, to 19.95, near the 52week low of 18.56, set April 4. The Monett, Md., provider of automated teller machine networks for banks said its earnings will miss Wall Street's projections.
Republic Services rose 1.24, or 7%, to 19.05. S&P said it would add the Fort Lauderdale, Fla., wastecollection company to its S&P MidCap 400 Index, replacing Genzyme.
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