Buyers stay away on jobless news
May 03, 2001 12:26 PM ET
by Robert Wang
NEW YORK -- The Nasdaq showed little signs of improvement at midday as the market absorbed the prospect that a higher number of jobless claims could mean a slower than anticipated economic recovery.
The U.S. Labor Department said that the number of people filing unemployment insurance claims for the week ending April 28 rose by 9,000 from the previous week to a 5-year high of 421,000. Economists had expected a lower number of claims.
Noon slump
At 12:21 p.m. ET, the Nasdaq Composite was down 57.52, or 2.59 percent, to 2,163.08.
The Dow Jones industrial average lost 107.75, or 0.99 percent, to 10,768.93.
The S&P 500 dropped 20.33, or 1.60 percent, to 1,247.10.
The Wilshire 5000 declined by 185.46, or 1.59 percent, to 11,514.73.
The Philadelphia Semiconductor index fell 22.24, or 3.32 percent, to 648.41.
Rambus charges a lot
Shares in chipmaker Rambus (RMBS: +1.48, 17.88) surged about 10 percent after reports that licensees of Rambus' SDRAM technology are paying royalties that are higher than what analysts had estimated. Rambus was forced to reveal the information as part of its patent infringement suit against German chipmaker Infineon Technologies (IFX: -1.50, 40.30).
Chipmaker Cirrus Logic (CRUS: +2.52, 19.22) rose about 15 percent after it said it earned 6 cents a share for its fourth quarter, which matched the Thomson Financial/First Call consensus estimate.
The company said it would increase its presence in the high-profit-margin DVD player and MP3 player chip market but forecast a sequential revenue drop for Q1 of 10 to 15 percent.
Salomon Smith Barney upgraded Cirrus Logic to "buy" from "outperform" but cut its earnings estimates for 2002 and 2003. The brokerage said a rebound in orders and the restructuring moves will likely improve the company's earnings predictability.
Chip equipment maker Novellus (NVLS: -3.35, 52.14) said it didn't anticipate a turnaround in its declining orders until the fourth quarter at best.
Tucker Anthony Sutro downgraded Applied Materials (AMAT: -2.54, 52.15) to "underperform" from "market perform."
Chipmakers Intel (INTC: -1.30, 30.62), Advanced Micro Devices (AMD: -1.01, 31.94) and Xilinx (XLNX: -1.47, 46.80) fell back with the market.
Network equipment companies Cisco Systems (CSCO: -1.32, 18.68) and Juniper Networks (JNPR: -2.69, 62.42) did likewise.
Macro disappoints Street
Macromedia's (MACR: -5.45, 21.13) shares fell about 20 percent after reporting Q4 net income of 15 cents a share, which was 5 cents short of analysts' expectations. The Web development software maker declined to give financial guidance. The company made 30 cents a share in the year-ago period.
In response to the open source Linux operating system, which is supported by IBM (IBM: -1.61, 113.79), Microsoft (MSFT: -0.80, 68.96) will reportedly allow certain programmers outside of the company to have more access to some of the source code of its software.
However, a Microsoft executive in a speech at New York University today is expected to strongly attack the open source system saying it could negatively affect the concept of intellectual property.
Dell sharpens ax
A Dell Computer (DELL: -0.94, 25.79) executive said at a technology conference that the PC maker would be "ruthless" in cutting costs and that "absolutely" would involve more layoffs.
Lehman Brothers downgraded handheld computer maker Handspring (HAND: -2.62, 14.88) to "buy" from "strong buy" in view of what it sees as a pricing war in the making with Palm (PALM: -1.35, 8.40). Both companies were down at least 13 percent.
Credit Suisse First Boston cut its earnings estimates for data storage products company EMC (EMC: -2.69, 41.31). The brokerage's forecast for 2001 was reduced to 74 cents a share from 79 cents a share while the 2002 call was cut to 91 cents a share from 98 cents a share.
CSFB said customers would need less new data storage capacity as they figure out how to more efficiently use what they already have.
Computer hardware companies Sun Microsystems (SUNW: -0.89, 19.55), Hewlett-Packard (HWP: -0.64, 28.01) and Compaq Computer (CPQ: -0.09, 17.86) were lower.
Better than expected
E-business network provider Genuity (GENU: +0.07, 2.79) posted a Q1 loss of 30 cents a share, which was better than analysts' forecasts of a loss of 33 cents a share. However, the figure was worse than last year's Q1 loss of 22 cents a share.
Separately, Genuity revised its credit agreement with Verizon Communications (VZ: -1.31, 55.59), which will increase the amount it will lend to the Internet company to $900 million from $500 million.
AOL Time Warner (AOL: -0.97, 50.64), Yahoo (YHOO: -1.97, 20.95), eBay (EBAY: -2.05, 51.65) and Amazon.com (AMZN: -0.54, 16.57) all retreated.
Robert Wang covers the stock markets for Upside.com. Reach him at rwang@upside.com. If you would like to submit a letter to the editor regarding this story, email online@upside.com.
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