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CNNfn tech stock report
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September 17, 1998: 5:34 p.m. ET
Global market downturn, fears over interest rates take toll on techs
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NEW YORK (CNNfn) - Technology stocks slumped Thursday as investors fear the Federal Reserve and other central banks around the world could put the brakes on markets by hiking interest rates.
The Nasdaq Composite lost 43.66 points to close at 1,646.25 on volume of slightly more than 683 million shares. Declines outnumbered advances by more than a 2-to-1 margin.
Telecom-equipment stocks took some big hits after France Alcatel warned it would miss profit forecasts this year because of economic troubles in Russia and Asia. Alcatel Alsthom S.A. (ALA) American depository receipts plummeted 12-1/16 to close at 19-1/4, setting a new 52-week low. The company's troubles prompted BT Alex. Brown to downgrade shares to "market perform" from "strong buy."
That bad news sent most networking stocks lower. Lucent Technologies Inc. (LU) lost 4-1/4 to close at 72-1/8, Tellabs Inc. (TLAB) lost 3-9/16 to end at 40-1/16 and Cisco Systems Inc. (CSCO) lost 3-1/8 to end at 61-1/2. Northern Telecom Ltd. (NT) was another big loser, closing down 6 to 39-9/16.
One of the day's biggest tech gainers was networking-equipment maker Ascend Communications Inc. (ASND). The company's stock climbed on rumors the company will soon announce a partnership with Alcatel to produce faster equipment for Internet service providers.
After beginning the day at 42-3/4, Ascend jumped as high as 49-1/4 before settling in at 47-9/16 for a gain of 2-5/8.
Cell-phone stocks also took a beating as Sweden's L.M. Ericsson Telephone Co. (ERICY) lost 1-7/16 to close at 18-1/2. Finland's Nokia Corp. (NOK.A) lost 5-13/16 to 75-1/2.
Big name techs also took hits across the board. Dow component IBM Corp. (IBM) lost 3-3/4 to 126-3/4, Microsoft Corp. (MSFT) lost 3-1/4 to 104-15/16 and Dell Computer Corp. (DELL) lost 1-15/16 to 58-1/8.
Chip giant Intel Corp. (INTC) lost 2-1/16 to 83 despite saying it expects good quarterly results. Analysts attributed the downturn to the fact that many investors simply feel the stock is too high-priced.
As they do in every tech downturn, Internet stocks also turned in losses across the board.
Online bookseller Amazon.com Inc. (AMZN) dropped 7-1/2 to 77, Internet marketer CMG Information Services Inc. (CMGI) lost 5-7/16 to 42-9/16, search-engine designer Inktomi Corp. (INKT) lost 3-15/16 to 62-15/16 and America Online Inc. (AOL) lost 4-1/2 to 97-1/2.
Educational-software maker Apollo Group Inc. (APOL) lost 7-11/16 to 29-1/16 after The Wall Street Journal raised questions about the company's valuation. Apollo responded saying it expects "very good" fourth-quarter results.
Chip-equipment maker Dupont Photomasks Inc. (DPMI) lost 3-7/8 to 23-3/4 after warning weaker demand will take a significant toll on earnings.
Among Thursday's few winners was chip maker Advanced Micro Devices Inc. (AMD) which gained 1 to 17-3/4 after Merrill Lynch raised its 1999 earnings estimate.
Software maker Structural Dynamics Research (SDRC) gained 1-7/16 to 11-7/16 after the company's board approved a 3 million-share stock buyback.
Video-conference company 8x8 Inc. (EGHT) gained 7/8 to 3-7/32 after the company announced Sam's Club warehouse stocks will be the first retailer to carry its ViaTV video phones.
For the latest information on technology, tune into CNNfn's "Digital Jam" weeknights at 7:30 p.m. ET or click here to watch the program via Microsoft NetShow.
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