Technology Stocks Plummet
As Nasdaq Drops 140 Points
No Technology Sector Is Spared;
Dell Drops 16%, Yahoo! Slides 17%
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- Technology stocks plunged Monday, as shares of
companies ranging from blue-chip computer and software makers to
speculative Internet stocks were battered.
The Nasdaq Composite Index plummeted 140.43, or 8.56%, to 1499.25, while
Morgan Stanley's high-tech 35 index dropped 57.84, or 10.75%, to 480.15.
Both are now more than 25% off their all-time highs.
The Dow Jones Industrial Average slid 512.61, or 6.37%, to 7539.07
"The panic button just went off," said William
Blair analyst Abhishek Gami, "and a lot of stock
prices were cut right in half."
In the tech sector, "They are slaughtering the
sacred cows," said David Wu, an analyst at ABN
Amro Inc.
Virtually no company was spared. Of the
Nasdaq Stock Market's four biggest companies,
Dell Computer, which hit its all-time high of
129 3/8 just last week, dropped 18 3/4, or 16%,
to 100. Microsoft lost 9 5/16, or 8.9%, to 95 15/16; Intel dropped 5 13/16, or
7.6%, to 71 3/16; and Cisco Systems retreated 12 13/16, or 14%, to 81 7/8.
Of the two tech stocks that are part of the 30-stock Dow Jones Industrial
Average, International Business Machines dropped 9 15/16, or 8.1%, to 112
5/8 and Hewlett-Packard fell 2 15/16, or 5.7%, to 48 9/16 in composite
trading.
Also, Web stocks, which largely managed to hold their ground as the rest of
the market swooned throughout much of August, were down sharply Monday
for the third straight day. Yahoo! dropped 14 1/16, or 17%, to 69; CNET
dropped 4 5/8, or 11%, to 38 1/4; Amazon.com slid 22 9/64, or 21%, to 83
3/4; and AtHome tumbled 8 1/4, or 22%, to 28 1/2; all on Nasdaq. America
Online declined 14 5/16, or 15%, to 81 15/16 on the Big Board. CMG
Information Services, which has built its fortunes on funding Web start-ups,
plummeted 11 7/8, or 24%, to 38 1/8 on Nasdaq.
Monday's
Close
Change
From
High
Year
to
Date
Dow
Industrials
7539.07
-19%
-4.7%
Nasdaq
1499.25
-26%
-4.5%
Dell
$100
-23%
+138%
Cisco
$81.875
-22%
+47%
Source: Bridge Telerate
Mecklermedia's Isdex index, which tracks 50 Internet content and services
stocks, dropped 16.07, or 15.4%, to 88.23.
With half an hour left in market action, inquiries about margin calls and
interest rates, in addition to lamentations about tanking Internet stocks and
Dell's plunging stock price scrolled across computer screens as thousands went
on-line to try and make sense of the carnage. "This would be comical if I did
not want to retire someday," said "Labowner," a chat room participant. "Is it
safe to say, 'Bull market is over? " asked "Justinfair," a participant on the
Motley Fool's "Foolish Chat."
Some analysts attributed the huge losses to a change in investor sentiment and
a desire to take some profits among some of the highest-flying names on the
market.
Jeff Applegate, chief investment strategist at Lehman Brothers, said he doesn't
think the market will settle down until there is clarity on the political situation
in Russia and signs of an economic turnaround in Japan. And if bad news
continues to emerge on both of those fronts, then technology stocks could
continue to suffer, he said, as a large proportion of technology companies'
revenue come from overseas.
Other analysts, however, said that concerns about fundamental changes in the
business outlook weren't the primary factor behind the drop in technology
stocks.
"Fundamental information is not driving the
market -- it's investor sentiment that is driving
the market," said Laura Conigliaro, an
enterprise- hardware analyst at Goldman
Sachs & Co. "What you've got is companies
where most investors have profits," she said,
"and in this sort of a market they're just
taking profits ... because they've got them."
Still, "These stocks have not declined to the
low valuation levels that they have in previous bottoms," said William Milton,
an analyst at Brown Brothers Harriman. "They have come from great heights
to levels that, by historical standards, are [still] very high."
Lou Mazzucchelli, an analyst at Gerard Klauer Mattison & Co., said he
continues to recommend the personal-computers companies he follows because
eventually, investors will return to the group.
"It's hard to know when the psychology is going to change, but where is the
money going to go?" he asked. "Can you do better in the bond market? No. In
a CD? No." He added, "Until somebody gives me a convincing answer that the
money has a better place to go, then I think the money will come back here."
Among other individual stocks, U S West Communications turned around
intraday. The stock rose briefly after the telecommunications service provider
reached a tentative agreement over a new labor contract with the
Communications Workers of America, but closed lower, dropping 7/16 to 51
11/16 on the Big Board.
Autodesk slipped 2 3/8 to 23 3/8 on Nasdaq, even though Morgan Stanley
Dean Witter and BancAmerica Robertson Stephens raised their ratings on the
stock of the design-software maker.
-- Johanna Bennett and Christopher Grimes of Dow Jones Newswires in New
York contributed to this article. |
