Dell leads the Nasdaq down
upside.com
Dell leads the Nasdaq down
August 17, 2001 10:28 AM ET
by Thomas Coyle
NEW YORK -- Skittish investors sent technology share prices down sharply this morning, goaded, to a large extent, by disappointing guidance from Dell Computer (DELL: -1.61, 23.77).
Early indices
At 10:14 a.m. ET, the Nasdaq Composite Index was down 42.07, or 2.18 percent, to 1,888.25.
The Philadelphia Semiconductor Index was down 23.73, or 4.07 percent, to 559.30.
Bad guidance from car maker Ford (F: -1.76, 21.71) rattled blue chips, but the group stayed ahead of the broad market. The Dow Jones industrial average was down 53.07, or 0.51 percent, to 10,339.45.
The broad market's losses were sharp. The S&P 500 was down 12.53, or 1.06 percent, to 1,169.13, and the Wilshire Total Market Index was down 109.05, or 1 percent, to 10,825.56.
Trade imbalance
The U.S. trade deficit expanded in June, moving up to $29.4 billion from $28.5 billion in May.
Total exports decreased to $86.0 billion in June from $87.7 billion in May. Goods exports were $60.8 billion in June, down from $62.8 billion in May. Total imports decreased to $115.4 billion in June from $116.2 billion in May. Goods were $96.5 billion in June, down from $97.3 billion in May.
Dell's warning
Dell Computer warned that third-quarter sales could be as much as 5 percent lower than in the second quarter.
The PC maker met the Street's call for second-quarter earnings, but fell short in terms of sales, earning 16 cents a share on revenue of $7.61 billion. In the year-ago quarter, Dell earned 22 cents a share on sales of $7.67 billion.
Dell's report drew a mixed reaction from the analyst community, though full-year estimates came down nearly across the board.
Lehman Brothers said it was still cautious about the stock, reducing its estimate for Dell's full fiscal year earnings to 63 cents a share from 66 cents a share (consensus is for a full-year gain of 69 cents a share). Bear Stearns said that Dell is poised to come out of this downturn as the winner of the PC pricing war. Merrill Lynch said that, despite Dell's problems, it outperforms the computer hardware group in all regions and business segments, making its weakness now a buying opportunity.
HP beats Street
Shares in PC and computer peripherals maker Hewlett-Packard (HWP: +0.46, 24.59) retraced losses posted in recent sessions after it posted a third-quarter gain of 11 cents a share on sales of $10.1 billion. Analysts had been expecting a gain of 4 cents a share on sales of $10 billion, down from earnings of 49 cents a share on sales of $11.82 billion in last year's Q3.
Margins were slightly better than expected. HP said it didn't see much room for improvement until 2002.
PC makers Gateway (GTW: -0.23, 10.01) and Apple (AAPL: -0.40, 18.25), as well as Internet server maker Sun Microsystems (SUNW: -0.43, 14.28), came under pressure. Handheld device makers Research in Motion (RIMM: -1.42, 20.68), Palm (PALM: -0.05, 3.99) and Handspring (HAND: -0.02, 3.98) fell back, too.
Revenue falling
Maxim Integrated Products (MXIM: -2.21, 46.69) warned that current-quarter revenue would be lower than in the first quarter. The chipmaker posted a fourth-quarter loss, including charges, of 5 cents a share on sales of $318.15 million. Excluding those charges, the company posted a gain of 25 cents a share, two cents better than expected. In the year-ago period, Maxim earned 26 cents a share on sales of $256.6 million.
Lehman Brothers advised clients to avoid Maxim on the grounds that the stock's recent run-up anticipated a rosier recovery scenario than its results would seem to dictate.
Chip stocks fell back on that news, with Intel (INTC: -1.23, 28.93) and Actel (ACTL: -0.26, 21.88) in the vanguard.
There was no place to hide for chip equipment stocks either. Applied Materials (AMAT: -1.10, 43.60), KLA-Tencor (KLAC: -1.37, 48.29) and Novelus (NVLS: -1.10, 46.27) lost ground.
Phones sales down
Credit Suisse First Boston noted that monthly mobile phone shipments in Japan were down for first time in 21 months, according to a survey conducted by a Japanese information technology trade association.
Shares in mobile communication equipment makers Nokia (NOK: -0.96, 17.50), Ericsson (ERICY: -0.21, 5.03) and Motorola (MOT: -0.72, 17.28) withered in the early session.
Mobile communication carriers AT&T Wireless (AWE: -0.13, 16.54), Sprint PCS (PCS: -0.73, 22.78), Nextel (NXTL: -0.38, 13.12) and Vodafone (VOD: -0.84, 18.06) went south as well.
Doubts
The Internet networking space was depressed by doubts about CacheFlow's (CFLO: -0.34, 3.75) ability to claw its way to profitability in the near term.
Networkers Juniper (JNPR: -0.60, 19.42), Cisco (CSCO: -0.56, 16.92) and 3Com (COMS: -0.07, 4.93) saw sharp losses. |
