Qualcomm, Motorola drag down the market

By Ben Rooney, staff reporter

NEW YORK (CNNMoney.com) -- Shares of Qualcomm and Motorola fell to multi-month lows Thursday, sparking a broad-based stock selloff, after both companies issued disappointing outlooks.

Qualcomm, the world's No. 1 maker of chips for cell phones, was down 13% to $41 a share -- its lowest level since late October.

The stock came under pressure after the San Diego-based company said late Thursday that it expects sales to be $11 billion, at most, in 2010. That's down $300 million from the company's previous sales forecast.

Paul Jacobs, Qualcomm's chief executive, said the reduced sales forecast was due to a "subdued economic recovery" in some regions and stronger demand for lower-end products.

Meanwhile, shares of Motorola (MOT, Fortune 500) fell nearly 12% to $6.54 -- the lowest level since late July -- after the cell phone maker said it expects to suffer a loss of up to 3 cents per share in the first quarter.

The warning caught many on Wall Street off guard. Analysts surveyed by Tomson Financial were expecting Motorola to post a profit of 3 cents per share in the first quarter.

Still, the Schaumburg, Ill.-based company reported adjusted earnings of 6 cents per share for the fourth quarter, compared with a loss of $1.61 per share a year ago.

Qualcomm's (QCOM, Fortune 500) dour outlook weighed on the Sox (SOX), an index of 19 semiconductor companies, which fell below a key technical level.

The selloff then spread to the broader market, because investors see the Sox as a leading indicator of overall growth, said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.

"The semis usually lead the market because they're in so many things," he said. "When the Sox is down it's very bearish for the market."

Indeed, the Dow Jones Industrial average was down 1.3%, led by declines in its technology components, including IBM (IBM, Fortune 500) and Hewlett-Packard. (HPQ, Fortune 500) The tech-heavy Nasdaq was down nearly 2.3%.  To top of page

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Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET


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