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U.S. Stocks Fall; IBM, Nvidia Decline on Accounting Concern
From Bloomberg
By Danielle Sessa
New York, Feb. 15 (Bloomberg) -- U.S. stocks fell, led by International Business Machines Corp., after the New York Times said the largest computer maker didn't fully reveal a gain from the sale of a unit.
Nvidia Corp.'s disclosure that federal regulators are investigating the chipmaker's accounting boosted concern companies are misstating profits. A report showing consumer confidence unexpectedly fell this month also hurt stocks by suggesting an economic rebound may be less robust than anticipated.
``Investors are focused like a laser beam on accounting issues,'' said Robert Bloom, president of LF Capital, which manages $1 billion. They are ``a blow to investor confidence.''
IBM, which said the unit's sale was ``properly and fully'' reported, accounted for one-third of the Dow Jones Industrial Average's loss. The Dow dropped 98.95, or 1 percent, to 9903.04.
The Standard & Poor's 500 Index fell 12.30, or 1.1 percent, to 1104.18. The Nasdaq Composite Index declined 38.17, or 2.1 percent, to 1805.20.
For the week, the Nasdaq shed 0.8 percent, while the S&P 500 gained 0.7 percent and the Dow climbed 1.6 percent. Exchanges will be closed Monday for the Presidents' Day holiday.
The University of Michigan consumer sentiment index for February fell to 90.9 from 93 last month, and analysts attributed the decline to concern that more companies have issued misleading financial reports.
``Retail sales is a driver of the economy and if consumer confidence falters then consumer spending will falter and that's not good for the economy,'' said Todd Clark, head of listed trading at Wells Fargo Securities in San Francisco.
`Looking for a Correction'
The drop in confidence curbed optimism from reports this week that showed rising retail sales and falling jobless claims.
``We're looking for a correction,'' said Frederick Sears, who helps manage $150 million at Investors Capital Corp. in Lynnfield, Massachusetts. ``Too many people are convinced that the economy is OK and that we're out of the recession, but we don't agree.''
More than 1.3 billion shares traded on the New York Stock Exchange, in line with the three-month daily average. Three stocks fell for every two that rose on the Nasdaq Stock Market, while advancing and declining shares were about even on the NYSE.
IBM dropped $5 to $102.89. The company didn't treat the $300 million sale of its optical transceiver unit as a one-time gain when it reported fourth-quarter earnings last month, the New York Times said. The paper said the sale was used to lower operation costs, a practice that doesn't provide an accurate picture of a company's operations.
Nvidia's Decline
Nvidia fell $4.81 to $57.35. The computer graphics chipmaker said the Securities and Exchange Commission is reviewing the recording of reserves in the fourth quarter of fiscal 2000 and first quarter of fiscal 2001 and product costs booked in the second and third quarters of last year. Nvidia posted the biggest advance in the S&P 500 last year.
Corporate accounting practices have come under increased scrutiny following the collapse of Enron Corp., which hid $1 billion of losses in affiliates. Companies from Tyco International Ltd. to Cisco Systems Inc. have declined as investors questioned the accuracy of their earnings and revenue statements.
AES Corp. tumbled $2.50, or 26 percent, to $7 on concern the devaluation of the Venezuelan currency will hurt income from the electricity generator's business there, analysts said.
WorldCom Inc. slid 39 cents to $6.73. The second-largest telecommunications company said an internal audit found that about 12 salespeople improperly boosted their commissions, costing the company as much as $4 million. The disclosure comes one week after Chief Executive Bernie Ebbers told investors the company's finances are sound.
Take-Two Interactive Software Inc. dropped 38 cents to $18.18 in its first day of trading since Jan. 22. The SEC is looking into the video-game maker's accounting as the company restated seven quarters of financial results, saying it improperly recorded revenue from sales to distributors.
Symbol Tech Plunges
Symbol Technologies Inc. plunged $3.39 to $8.40 and its 29 percent decline was the biggest in the S&P 500. The maker of bar- code scanners cut its 2002 earnings and sales forecasts because spending on information technology products isn't showing signs of reviving.
Dell Computer Corp. dropped $1.21 to $25.60. Chairman Michael Dell said corporate PC sales may pick up in the second half of this year, backing off his earlier prediction for a rebound by the middle of 2002.
Telecommunication shares slumped on concern they will follow Qwest Communications International Inc. and borrow from banks as short-term lending dries up.
Sprint PCS Group, the fourth-largest mobile phone operator, fell 93 cents to $9.27 and Qualcomm Inc., which licenses patents for mobile phone phones used by 103 million people, dropped $2.65 to $37.40.
Halliburton Climbs
Halliburton Co. rose $1.61 to $16.27. A U.S. bankruptcy judge has temporarily halted more than 200,000 asbestos claims against its Dresser Industries unit, which used to own a business beset by the health lawsuits.
Halliburton shares fell to a one-year low of $10.06 on Jan. 18 on concern asbestos claims would drive the second-biggest oil- services provider into bankruptcy.
PayPal Inc. surged $7.09, or 54 percent, to $20.09. The provider of online payment services became the first Internet company to go public in almost a year.
The Russell 2000 Index of smaller stocks lost 1.50, or 0.3 percent, to 469.25. The Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, shed 113.83, or 1.1 percent, to 10,315.48. The market value of U.S. stocks dropped $130.9 billion.
AES Corp. (AES)
Cisco Systems Inc. (CSCO)
Dell Computer Corp. (DELL)
Enron Corp. (ENE)
Halliburton Co. (HAL)
International Business Machines Corp. (IBM)
Nvidia Corp. (NVDA)
Qualcomm Inc. (QCOM)
Qwest Communications International Inc. (Q)
PayPal Inc. (PYPL)
Sprint PCS Group (PCS)
Symbol Technologies Inc. (SBL)
Take-Two Interactive Software Inc. (TTWO)
Tyco International Ltd. (TYC)
WorldCom Inc. (WCOM)
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Best Regards, J.T. |
