Major techs take hits; Plus several big names announced restructuring
plans late in the day - CNNfn, June 18, 1998: 6:57 p.m. ET
NEW YORK(CNNfn) - Technology shares received
a jolt Thursday after several companies announced job
cuts and restructuring plans.
Topping the list was Texas Instruments (TXN)
which announced after the close that it agreed to sell
its troubled memory chip business to Micron
Technology (MU) for $800 million. That move is part
of a restructuring that includes the elimination of 3,500
jobs. Texas Instruments shares were halted in
after-hours trading. Micron Technology did not trade
after-hours.
After the bell, portable memory products maker
Iomega (IOMG) warned it expects to post a loss for
fiscal 1998. Analysts expected a profit for the year of
3 cents a share. Iomega warned the loss could put it in
violation of its financial covenants. The company also
plans to cut to 600 to 700 jobs, which could amount to
14 percent of its workforce. Iomega shares were
halted in after-hours trading.
Sequent Computer (SQNT) said its second
quarter earnings will come in below analysts'
expectations. As a result, the company will launch a
stock buy-back and cut up to 250 jobs.
Novellus Systems (NVLS) said late Thursday it
will cut ten percent of its workforce, about 170 people,
because of weakness in the semiconductor market.
As for what happened during the trading day: The
Nasdaq composite lost 3.70 to 1772.70.
Networking stocks were very active. Shares of
Ascend Communications (ASND) rose 1 to 50-3/8,
in heavy trading. Traders attributed the rise to rumors
that Swedish cell phone giant L.M. Ericsson
(ERICY) is in talks to buy Ascend. Ericsson ADRs
lost 1-9/16 to 25-7/8, in New York trading.
The other big player in that sector, 3Com
(COMS), rallied 2-5/8 to 27-1/4, on more takeover
speculation. Germany's Siemens is rumored to be
considering a bid for 3Com.
News that Walt Disney Co. was acquiring a
43-percent stake in Infoseek (SEEK) pushed its
stock sharply higher by mid-afternoon before the
shares slipped back to finish the day up just 5/8 at
35-1/8.
Lycos (LCOS) jumped 2-1/8 to 61-5/8 on
speculation it could be the next takeover target in the
group.
But shares of Excite (XCIT) shed 3 to 73-1/8.
And Yahoo! (YHOO) slipped 2-7/8 to 127-3/4, after
the company admitted it will post a loss for the second
quarter and likely end the year in the red.
As for other Internet stocks, Amazon.com
(AMZN), the volatile Internet book and music retailer,
fell 7-1/16 to 71-15/16.
CNET (CNWK) gained 2-1/8 to 58-1/8. Shares of
the Intenet media company continued to rally after
gaining more than ten points yesterday.
Internet service providers were red hot again.
Mindspring (MSPR) rallied 5-1/8 to 70. Earthlink
(ELNK) gained 2-3/4 to 63-1/16.
Network Solutions (NSOL), the keeper of
Internet domain names, jumped 2 to 41-1/2 after
Prudential Securities initiated coverage of the stock
with a "buy" rating.
IBM (IBM) dropped 2-3/16 to 108-13/16 after
Goldman Sachs cut the stock from its priority list, but
left it on the recommended list.
Hewlett-Packard (HWP) fell 1-13/16 to 56-11/16
after Gruntal trimmed its earnings estimates for the
company in the current quarter, as well as fiscal 1998
and 1999. Goldman Sachs cut earnings estimates for
H-P, as well, citing the Asian crisis.
Stratus Computer (SRA) 7-3/4 to 24-3/4, a loss
of almost 24 percent, after announcing it will post a
loss this quarter. Analysts were expected a gain.
Computerized video editing system maker Avid
Technology (AVID) dropped 4-5/16 to 28-7/16 after
the company was downgraded to "neutral" by Piper
Jaffray.
Evolving Systems (EVOL) dropped 5-3/4 to
9-1/2. The software designer warned it will post a loss
for the quarter. Wall Street expected a profit.
Finally, Micro Focus Group [MIFGY[ dropped
8-1/8 to 33-7/8. Late Wednesday the Anglo-American
enterprise software maker bought Intersolv for $583
million in stock.
Oracle Corp. (ORCL) was the most active stock
on the Nasdaq, one day after it said fiscal fourth
quarter earnings beat Wall Street estimates by three
cents a share. Earnings for the quarter were 41 cents
a share, beating Wall Street consensus estimates of 38
cents and quarterly profits of 36 cents for the
corresponding quarter last year.
SanDisk Corp. (SNDK) said it expects second
quarter revenues to be below first quarter levels, due
to declining prices for its data storage products. The
company said earnings per share "are expected to be
marginally positive."
Analysts expected the maker of specialized data
storage products, called "flash memory," for
electronics systems to earn a profit between 16 cents
and 22 per share in the second quarter, according to
First Call. Shares of SanDisk closed down 2-3/4 to
16-1/4.
America Online Inc. (AOL) said it would file a
universal shelf registration statement with the
Securities and Exchange Commission Thursday,
enabling it to offer and sell securities up to a total
value of $1 billion.
The largest U.S. online service provider said it filed
the registration to gain additional flexibility in accessing
the capital markets.
For more on the day in technology, tune in Digital
Jam on CNNfn at 7:30pm ET
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