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News > Technology
Yahoo! sinks Net stocks
March 8, 2001: 6:09 p.m. ET

Problems at Yahoo spread to other Web firms as Nasdaq falls
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NEW YORK (CNNfn) - A profit warning from Yahoo! sparked a sell-off in Internet stocks Thursday that handed the Nasdaq composite its first losing session of the week.

After Wednesday's close, Yahoo! warned that its first-quarter results would fall far short of its previous estimates. The company also announced that it is seeking a replacement for its chief executive, Tim Koogle, who will remain its chairman.

Shares of Yahoo!, considered a bellwether of the Internet media industry, dropped $3.25 to $17.69.

Yahoo! had already reduced its estimates in January, pinning the blame on weaker sales of advertising, which represents the bulk of the company's revenue. In a teleconference with analysts Wednesday evening, Yahoo! executives said the advertising market had become significantly weaker in the two months that passed since they set their initial targets.

When they first warned of slower advertising sales in January, Yahoo! executives had forecast an upturn in their business in the second half of this year. On Wednesday's call, they said they could not provide a forecast beyond the current quarter.

The news prompted downgrades from several investment brokerages Thursday, including a rare "sell" rating from SG Cowen.

"Yahoo! thought that they had only one problem, the economy, and that it would pick up materially in the second half of 2001," SG Cowen analyst Scott Reamer said in a note to clients Thursday. "Our recent channel checks with advertisers and their agencies continue to reinforce both the cyclical and secular problems that we originally identified.

Among the other firms downgrading Yahoo! shares Thursday: Merrill Lynch, which changed its rating on the firm to "neutral" from "hold"; and Friedman Billings, which downgraded the stock to "market perform" from "accumulate."

Shares of Yahoo! competitor Terra Lycos (TRLY: Research, Estimates) fell 75 cents to $11.75. Internet investment firm CMGI (CMGI: Research, Estimates), whose holdings include the Web portal AltaVista, dipped 47 cents to $4.31. Shares of DoubleClick (DCLK: Research, Estimates), a firm that specializes in Internet advertising, eased $1.25 to $12.06.

Chip, hardware stocks also pressured

At the same time, semiconductor stocks, which had been on a tear in recent sessions, fell. Computer hardware stocks, which also recently had been showing signs of strength, were mostly lower.

In the chip segment, shares of companies that make the equipment used to manufacture semiconductors were weighing heavily on the Philadelphia Stock Exchange's semiconductor index, or Soxx, which was down 3.50 points at 639.10.

KLA Tencor (KLAC: Research, Estimates) shares fell $25 cents at $44.38. Novellus Systems (NVLS: Research, Estimates) shares fell 69 cents to $46.25.

Among chip makers, shares of Altera (ALTR: Research, Estimates) fell 63 cents to $27.81. LSI Logic (LSI: Research, Estimates) shares declined 13 cents lower at $17.95. Xilinx (XLNX: Research, Estimates) lost 25 cents to $45.31.

Countering those losses were gains in shares of chip companies, including Micron Technology (MU: Research, Estimates), which rose $1.85 to $42.85, and Intel (INTC: Research, Estimates), which gained 31 cents to $33.25.

National Semiconductor (NSM: Research, Estimates) advanced 41 cents to $25.25. The chipmaker said fiscal third-quarter operating profit came in ahead of analysts' recently reduced expectations. But National Semi executives lowered their financial targets for the current quarter and fiscal year ending in May.

Computer hardware makers were falling sharply.

Shares of Compaq (CPQ: Research, Estimates) lost 53 cents to $21.26. Hewlett-Packard (HWP: Research, Estimates) fell 68 cents to $31.67.

In the networking segment, shares of Cisco Systems (CSCO: Research, Estimates) fell $1.19 to $22.81. Sun Microsystems (SUNW: Research, Estimates) slipped $1.75 to $20.31

Nortel Networks (NT: Research, Estimates) lost 74 cents to $18.24, but Lucent Technologies (LU: Research, Estimates) gained 22 cents to $12.97.

The Nasdaq composite index snapped a three-session winning streak, falling 55.16 points, or more than 2 percent, to 2,168.76. graphic





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.