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CNNfn tech stock report
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October 8, 1998: 4:44 p.m. ET
Concerns over outlook for Internet, software companies spark sell-off
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NEW YORK (CNNfn) - Technology stocks continued trudging through a week they'd rather forget as shares of Internet and software companies fell sharply in Thursday trading.
A late-day rally could not erase widespread losses sparked by concerns over the long-term outlook over the Internet and software sectors.
Web portal leader Yahoo Inc. (YHOO) plunged 9-9/16 to close at 104-3/16, despite reporting strong third-quarter earnings and user traffic after Wednesday's market close.
Keith Benjamin, an analyst at BancBoston Robertson Stephens, said some investors considered Yahoo's positive report a sign that all the good news in the Internet sector now lies in the past.
"Historically we've seen Yahoo lead the other stocks up, followed by the perception that there isn't any better news coming among the other stocks," he said.
Chris Galvin, an analyst at Hambrecht & Quist, told CNNfn that worries over declining ad revenues among Internet companies also have some investors worried.
"That's an issue confronting a lot of these companies," he said. "It's important for a company like Yahoo to continue to beat expectations on all metrics, and that's a challenge."
Those worries and Yahoo's slide carried over to the rest of the Internet sector, including its Web-portal rivals. Excite Inc. (XCIT) dipped 4-29/32 to 29-1/32, while Infoseek Corp. (SEEK) fell 2 to 18-1/2. Lycos Inc. (LCOS) dropped 2-1/8 to 25.
Also feeling the pain Thursday were online service provider America Online Inc. (AOL), which fell 5-3/8 to 86-/58, and e-commerce giant Amazon.com Inc. (AMZN), which tumbled 7-1/4 to 86-3/16.
The software sector also took a fall, as investors continued to express worry over companies that develop applications in the lucrative corporate enterprise market.
Microsoft Corp. (MSFT) dropped 2-15/16 to 91-3/16. BMC Software Inc. (BMCS), which fell 9-1/16 on Monday, continued its slide Thursday, shedding 1-7/16 to 40-9/16. Citrix Systems Inc. (CTXS) lost 4-1/2 to 50-3/4.
John Puricelli, an analyst at A.G. Edwards, said software companies are still caught in the fallout of analyst downgrades of key providers to the enterprise market.
"It was triggered by Goldman Sachs and Morgan Stanley downgrading SAP and PeopleSoft (PSFT), and now people are reevaluating the need for software," he said. "The big software companies were perceived as being able to do no wrong. Now they can do no right."
Hardware companies caught up in the sell-off included Dell Computer Corp. (DELL), which dropped 2-1/8 to 48-7/16, and Gateway Inc. (GTW), which fell 1-15/16 to 41-1/2. Apple Computer Inc. (AAPL) lost 1-1/8 to 30-13/16, and Sun Microsystems Inc. (SUNW) dipped 1-3/8 to 40-7/16.
Only computer networking giant Cisco Systems Inc. (CSCO) provided a bright spot among large-cap technology issues, breaking a streak of eight consecutive days of losses to close up 2-13/16 at 46-11/16. 
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