News of lower estimates for WDC, MXO, HTCH by analyst William Lewis is included in this article.
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Chips, hardware falter as day drags on
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 4:28 PM ET May 6, 2002
NEW YORK (CBS.MW) - Hardware and chip stocks closed lower on Monday; with IBM, Sun and EMC all hitting multi-year lows; amid a broad market decline.
The Philadelphia Semiconductor Index ($SOX: news, chart, profile) fell 1.5 percent to 473.1 while the Goldman Sachs Hardware Index ($GHA: news, chart, profile) lost 1.7 percent to 203.9.
Overall, trading was relatively light as investors awaited a Federal Reserve policy meeting on Tuesday. Also, networking giant Cisco Systems will report its quarterly results after Tuesday's closing bell.
Hardware
Hardware shares, mixed in the morning, found no support during afternoon trading.
IBM (IBM: news, chart, profile) fell again, hitting a three-and-a-half-year low. Shares ended off $5.78, or 7.1 percent, to $76. Sun Micro (SUNW: news, chart, profile) fell another 69 cents, or 10 percent, to $6.08 - also a three-and-a-half-year low. EMC (EMC: news, chart, profile) hit a four-year low. Shares declined 31 cents, or 3.9 percent, to $7.70.
Elsewhere, J.P. Morgan trimmed its forecast for second-quarter PC shipments, and, in turn, extended the view to all industry players. The brokerage now expects PC shipments to decline 6 percent this quarter instead of its previously targeted drop of 3 percent.
Analyst William Lewis lowered second quarter estimates for hard disk drive makers Maxtor, Western Digital and Hutchinson.
Maxtor (MXO: news, chart, profile) lost 7.8 percent, WDC (WDC: news, chart, profile) dropped 14 percent and Hutch (HTCH: news, chart, profile) lost 6.8 percent.
As for the stocks of the actual PC makers, Gateway (GTW: news, chart, profile) lost 4.2 percent, Apple (AAPL: news, chart, profile) lost 3.7 percent and Dell (DELL: news, chart, profile) dropped 2.3 percent. The "new" Hewlett-Packard (HPQ: news, chart, profile) added 4.5 percent.
H-P began trading with its new ticker symbol, "HPQ," to reflect its acquisition of Compaq, which officially closed Friday.
Chips
Analyst Joe Osha at Merrill Lynch said it's a "great time" to buy semiconductor stocks, given that the industry's recovery has become increasingly apparent.
He feels the recent weakness in the sector represents "the biggest decoupling of industry fundamentals and stock prices since April 2001," when stocks in the sector rallied despite fundamental weakness.
The Sox is down 6.3 percent this year and off 23 percent from this year's high, which occurred in March.
Equipment makers declined the least in the sector after being up the most in the morning.
Chipmakers, though, bore the brunt of Monday's selling: Altera, Motorola, LSI Logic, National Semi and Rambus all lost at least 3 percent.
Intel (INTC: news, chart, profile) shares dropped 2.9 percent to $25.78 while AMD (AMD: news, chart, profile) lost 4 percent to $10.61.
As part of J.P. Morgan's call about PC shipments, chip analyst Eric Chen lowered estimates for sector bellwether Intel and rival Advanced Micro Devices, as well as graphics chipmaker Nvidia. He cited recent indications of "persistent weakness" in the desktop PC market. Nvidia (NVDA: news, chart, profile) shares dropped 3.8 percent to $31.50.
Separately, Intel unveiled its latest desktop chip - the 2.53 GHz Pentium 4. The release had been expected to occur during this quarter. |
