Tech shares tumble after Intel warning
Wednesday March 4, 5:45 pm Eastern Time
NEW YORK, March 4 (Reuters) - Technology stocks tumbled in after-hours trading Wednesday after bellwether semiconductor-maker Intel Corp warned that first-quarter earnings would be below expectations.
''This news is gonna whack Intel,'' said Don Hays, director of investment strategy at Wheat First Union.
While Intel stood halted in after-hours trading, the news sent traders scampering to shed some tech holdings, traders said.
Among stocks trading lowering were International Business Machines Corp (IBM - news), which closed at 102-1/16 but stood at 99 after-hours.
Dell Computer Corp (DELL - news) gave back most of the more than 7 points it gained Wednesday, tumbling about 5 to 133 in after-hours action. Motorola Inc (MOT - news), which added 1-3/16 Wednesday to 57-7/16, was at 56-1/2. Texas Instruments Inc (TXN - news), up 1-15/16 to 54-15/16, was trading at 52-1/2 after hours. Also lower were Applied Materials Inc (AMAT - news), down 1 to 34-1/2 from its Wednesday close, and Micron Technology Inc (MU - news), traded at 33-3/4 after the bell after rising 2 to 35-5/8 Wednesday.
''I assume the rally in semiconductors is over and we'll see more weakness,'' said Hays. ''This is (corporate earnings) preannouncement season and this is kicking it off.''
Intel, the world's biggest maker of semiconductors, said after the market closed Wednesday that its first-quarter earnings would come in below expectations amid lower-than-anticipated demand.
The company also said revenue for the quarter would be about 10 percent lower than the $6.5 billion in revenue it had in the fourth quarter.
Also, first-quarter expenses would come in about 3 percent higher from the fourth quarter's $1.4 billion, Intel said.
When trading in the company's stock resumed in after-hours trading, it had dropped more than 10 points from its Wednesday close of 86-7/16 to about 76, traders said.
Intel's news surprised even those investors braced for the worst from high-tech companies because of Asia's financial crisis.
''Generally speaking we have been cautious on semiconductor capital equipment companies because of the Asian-related impact on the first quarter,'' said Phil Orlando, chief investment officer of Value Line's Asset Management division and holder of about 200,000 Intel shares in his main fund.
''But we maintained the (Intel) position because demand for networking, boxes and software, particularly in Europe and the U.S., has remained very strong,'' he added. ''We believed that Intel would weather the impending Asian storm in much better shape than their competitors.''
Some analysts, though, said the worst may come for Intel and the tech sector on Thursday.
''Intel has tried to rally and broke technically at 67 and then rallied to 95-96,'' said Hays. ''The 200-day moving average is key. If it (Intel's stock) breaks 81 tomorrow, it'll be a very weak sign.'' |
