NEW YORK (CNNfn) - Technology shares failed to hold onto gains they made last Friday, as investors dumped semiconductor issues following several negative analyst comments about companies in that sector.
Last Friday, the Nasdaq rose 148.83 points, or 5.4 percent, to 2,904.17, breaking a five-session losing streak. Techs failed to extend that rally Monday, with the Nasdaq closing down 23.85 at 2,880.53, a loss of 0.8 percent. The Philadelphia Semiconductor Index, or Soxx, plunged a much more severe 6.9 percent, driven down by losses in Broadcom, Xilinx, and Altera Corp.
Chip giant Intel (INTC: Research, Estimates) gained 6 percent earlier in the day after somewhat positive comments from Piper Jaffray analyst Ashok Kumar, who had been bearish on Intel in the past. However, Intel failed to hold onto most of those gains, closing up just 6 cents at $44.
In a research note issued Monday, Kumar said that there is a "possibility of modest upside to current 4-8 percent quarter-over-quarter revenue-growth guidance."
 "For the full year, we now expect unit growth just under 20 percent," Kumar wrote. "The stock could slowly start discounting product and demand stimulus in the second half of calendar 2001."
"With the stock down over 40 percent from its September highs, the downside risk is measured," Kumar added. "While on a relative valuation basis the stock looks attractive, historically that has not been a focal point for investors."
Semiconductors weak
Semiconductor stocks were hurt by separate analyst comments from Lehman Brothers and Salomon Smith Barney.
Lehman Brothers analyst Daniel Niles lowered his earnings estimates for Altera Corp. (ALTR: Research, Estimates) and Xilinx (XLNX: Research, Estimates), two makers of programmable logic devices.
Niles cut his calendar year 2001 revenue-growth forecast for Altera to 35 percent from 40 percent and to 44 percent from 51 percent for Xilinx. He cut his fiscal year 2001 earnings estimate for Altera to $1.40 from $1.45 and his fiscal 2001 estimate for Xilinx to $1.28 from $1.30.
Niles cited slowing demand in November and inventory buildup in the industry as reasons for the lowered estimates.
"Contract manufacturers have seen their inventory grow 104 percent year-to-date, versus revenue growth of 52 percent, while distributors have seen a 24 percent increase in inventory in the past six months, versus a revenue increase of 15 percent," Niles wrote in a research note issued Monday.
Xilinx closed down $10.31 at $46.50, an 18 percent plunge, while Altera was off $3.87 at $27.31, a 12 percent drop.
Separately, communications chip maker Broadcom (BRCM: Research, Estimates) plunged $19.56 to close at $97.56, a 16.7 percent loss, after Salomon Smith Barney analyst Clark Westmont cut his price target on the stock to $200 from $300. In a research note issued Monday, he said that there were "signs of flattening orders in Broadcom's supply chain, inventory concerns in the digital cable sector, and overall valuation compression" in the communications semiconductor area.
Broadcom is down about 65 percent from its 52-week high of $274.75.
Among other hard-hit chip stocks, PMC-Sierra (PMCS: Research, Estimates) lost $10.75 to $102.69, Cypress Semiconductor (CY: Research, Estimates) was off $3.12 at $26.81, and Applied Micro Circuits (AMCC: Research, Estimates) closing down $6.37 at $51.12
B2B Software makers decline, Microsoft files
Business-to-business software makers Ariba (ARBA: Research, Estimates) and Commerce One (CMRC: Research, Estimates) declined after being downgraded to "hold" from "buy" at WIT Soundview.
"In their heyday, both companies were valued as if they would provide the applications and infrastructure to power virtually all B2B commerce transactions and garner recurring revenue streams on those transactions," wrote Wit Soundview analyst David Mahoney. "While Ariba and Commerce One have dropped significantly, we still do not believe that the current stock prices adequately reflect the limited opportunity for simple procurement and marketplace applications."
Ariba closed down $11.43 at $67, a 14.6 percent loss, while Commerce One lost $3.75 to $36.
Separately, software giant Microsoft (MSFT: Research, Estimates) filed its main brief in its appeal of the federal and state antitrust case on Monday. The company said that it didn't violate antitrust laws, that the sanctions imposed by Judge Thomas Penfield Jackson were out of proportion to the alleged offenses, and that it was denied due process during the District Court trial when, for example, Judge Jackson didn't hold any hearings on proposed remedies against the company.
Microsoft finished up 75 cents at $70.69. 
|
