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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (144143)	4/8/2002 12:00:46 PM
From: tejek	Respond to of 1578133

IBM plunges more than 11 percent after warning Toronto pressured by IBM warning Big Blue (IBM: news, chart) cited sluggishness in its original equipment manufacturing technology business where IBM supplies companies with components for computers, ha and other systems. IBM now expects to report earnings of 66 cents to 70 cents a share on revenue of $18.4 billion to $18.6 billion, the company said. Analysts surveyed by Thomson Financial/First Call had been expecting earnings of 85 cents a share on revenue of $19.7 billion, on average. The stock, a component of the Dow industrial index ($INDU: news, chart), slumped $10.82 to $86.40, its lowest level since just after the terrorist attacks in September. With late morning volume topping 22 million shares, IBM was the most actively traded stock on the Big Board. Listen to USB Piper Jaffray market strategist Brian Belski talk about possible overreaction to the warning. Meanwhile, the Dow pared its losses to 89 points and the broader tech sector swooned. See Market Snapshot. 'Very tough' environment IBM CFO John R. Joyce said in a statement that the "business environment remains very tough" with continued slowdowns in customer buying decisions. "The first quarter traditionally is the weakest period of the year for technology purchases, and many of our customers chose to reduce or defer capital spending decisions until they see a sustained improvement in their business," Joyce said. IBM said its technology group revenue will decline by about 35 percent in the first quarter. The business will lose about $200 million on a pre-tax basis, or 8 cents per share. "Despite the difficult environment, we believe our strategies remain the right ones for our industry and that we will continue to gain or hold share in key strategic areas," Joyce said. "We remain committed to taking action to improve our competitiveness, and we are exceptionally well positioned to benefit when business conditions improve." Wall Street reacts Merrill Lynch analyst Steven Milunovich lowered his 2002 earnings target for IBM to $4.25 per share from $4.80 per share. "It is not clear to us as to whether the business is getting that much worse or this announcement reflects the inclinations of the new CEO," Milunovich said in reference to the new tenure of Sam Palmisano. "We believe that management may be inclined to set the earnings expectations lower going forward." He maintained ratings of "intermediate-term neutral" and "long-term buy" on IBM stock. An IBM spokesman did not respond to questions about a separate report in the Wall Street Journal that the company has notified 600 customer engineers in its global services operations in the U.S. that they will be laid off, the Wall Street Journal said. Market watchers noted that speculation about an IBM warning had been swirling in recent days. Nervousness about the technology giant has taken place over the last several quarters on the eve of earnings season. See full story. Adding to the worries have been concerns about accounting issues at Big Blue. Steve Gelsi is a reporter for CBS.MarketWatch.com in New York.