Tech stocks slip, led by Gateway

The technology-heavy Nasdaq index slipped below 2600 points yesterday, while consumer PC seller Gateway saw its shares shed nearly 39% of their value in heavy trading volume.

          The technology-heavy Nasdaq index slipped below 2600 points yesterday, while consumer PC seller Gateway saw its shares shed nearly 39% of their value in heavy trading volume.

          Gateway shares dropped $US11.50 to $US18 a share at midday (US time). Trading volume exceeded 12.8 million shares. The sharp downturn comes a day after Gateway announced that its fourth quarter sales were off because of weak early-holiday season PC sales. The company revised its fourth quarter expectations and said its revenue will come in at $US2.55 billion. The company had originally set a target almost $US500 million higher.

          Its announcement follows similar statements by Hewlett-Packard and Dell Computer, which cited weaker PC sales and difficult economic environment for earnings shortfalls and lowered revenue expectations. A new JP Morgan research report released Thursday suggests this could impact Microsoft as well.

          "The most significant negative impact of consumer PC weakness should be on Windows ME sales," the report says.

          This situation should not greatly impact Microsoft, however, as between 20% and 25% of Microsoft's revenues come from the consumer market, the study says, adding that the company's main focus remains on the business sector. Microsoft shares dropped 9.4% or $US6.12 a share to $US58.93 yesterday.

          Other technology heavyweights saw their shares slide this morning. IBM was down 6.14% or $US6.12 to $US93.68 a share. Dell shares were down 9.74% or $US2.12 to $US19.68 a share. Shares of Hewlett-Packard lost 10% or $US3.56 to $US31 a share. Intel's shares fell 10.67% or $US4.56 to $US38.18 a share. Cisco Systems' shares shed 5.14% or $US2.65 to $US49.03.

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