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Rates, chips nag techs
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June 24, 1999: 4:17 p.m. ET
Interest rate concerns, sagging semiconductors hold back techs
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NEW YORK (CNNfn) - Turmoil in the semiconductor sector roiled technology stocks Thursday.
The technology-laden Nasdaq Composite index fell about 44 points to 2,554 according to preliminary results. Techs affected the Dow as well, as Hewlett-Packard (HWP) lost 2-1/16 to 90-7/8 and AT&T (T) fell 1 to 54-1/8.
Interest rates were in the forefront of technology investors' minds Thursday. Next week, the Federal Reserve will meet to decide interest rate policy and many economists expect a hike. Since tech firms borrow heavily to finance growth and development, such increases make them jittery.
Semiconductor worries had a major impact on the markets Thursday as well. Investors were responding to a warning from chip company Advanced Micro Devices, which said late Wednesday it expects to lose $200 million during the second quarter as tightening profit margins squeezed its bottom line.
Additionally, memory chip maker Micron Technology reported losses of $28 million, or 10 cents per share, during the fiscal third quarter, below First Call estimates. Falling prices and increased competition from Asia were the causes cited.
Consequently, Advanced Micro Devices (AMD) dropped 1-1/8 to 17-1/16 and Micron Technology (MU) fell 4-5/16 to 39-5/8.
Chip leader Intel (INTC) fared a little better, losing 1-1/2 to 55-1/16, while Texas Instruments (TXN) got broadsided, plunging 6-1/16 to 132-3/4. Motorola (MOT) was off 2-1/2 to 89.
Despite Thursday's current difficulties for chips, John Hughes, market analyst at Shields & Co., warned not to miss potential better days for semiconductors, especially as their stocks have been consolidating.
"Now, if there's some short-term negatives here affecting this from a fundamental basis, obviously, these stocks would be weak for a few days," said Hughes. "But if we go back and look at the longer term trend of these stocks, most of them really remain in uptrends."
Elsewhere in the hardware sector, SCM Microsystems (SCMM) stock came under pressure, losing 5-1/2 to 48-7/8 after it warned Wall Street it would lose money in the second quarter.
Shares of Internet service provider Mindspring (MSPG) rose 3-1/2 to 82-1/8 Thursday after the company acknowledged it was in talks about "possible business combinations."
The Atlanta, Ga.-based ISP has been having a strong year and last quarter it increased its customer membership rolls by 67 percent over the previous quarter.
In the telecommunications sector, the $4.5 billion deal between wireless communications firms VoiceStream Wireless and Omnipoint was greeted in a most unbalanced way by investors.
Omnipoint (OMPT) shares jumped 8-7/32 to 29-1/32 Thursday, but VoiceStream Wireless (VSTR) stock edged 1 lower to 28-1/2.
The $24 billion merger between Lucent Technologies, the world's largest telecom equipment maker and networking company Ascend Communications came to its official completion Thursday, a deal which could help it challenge top networking firm Cisco Systems.
All three firms, however, ended lower in the wake of the news. Lucent (LU) fell 1-11/16 to 64, Ascend (ASND) was down 2-15/16 to 105-7/16 and Cisco Systems (CSCO) lost 1-5/8 to 60-1/4. 
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