US stocks fell on concern corporate profits won't recover soon after companies including Dell Computer Corp, Ford Motor Co and Gap Inc cut forecasts.
Analog Devices Inc dropped after projecting earnings that may miss estimates. Scientific-Atlanta Inc. said it couldn't provide a 2002 forecast. The NASDAQ Composite Index had its biggest loss since July 6.
"Earnings are still awful," said Allan Meyers, chief equity officer of Fifth Third Investment Advisors in Grand Rapids, Michigan, and manager of the US$700 million Kent Growth & Income Fund. "I've been saying for six months that the market would recover in August. Until two weeks ago, I still believed it."
The NASDAQ fell 63.31, or 3.3 percent, to 1,867.01, extending its August decline to 7.9 percent. The Standard & Poor's 500 Index lost 19.69, or 1.7 percent, to 1,161.97, with 10 of 11 industry groups dropping.
The Dow Jones Industrial Average declined 151.74, or 1.5 percent, to 10,240.78 as 25 of its 30 members fell.
For the week, the NASDAQ dropped 4.6 percent and the S&P 500 lost 2.4 percent. Both declined for a fourth time in five weeks.
The Dow fell 1.7 percent this week.
Citigroup Inc, the largest US financial-services company, is among Meyers' top holdings because he says its earnings will continue to grow even as the economy slows. His Kent Growth & Income Fund is down 10.4 percent year-to-date, while the S&P 500 has lost 12 percent.
Dell, Ford and Gap's forecasts reflect the slowing economy's drag on corporate profits. Analysts expect earnings for the S&P 500 to fall 13.2 percent in the third quarter, according to Thomson Financial/First Call, down from expectations for a 1.6 percent rise as of April 1.
Fourth-quarter earnings are expected to fall 0.7 percent, down from expectations for a 12.6 percent rise in April.
Two stocks fell for every one that rose on the NASDAQ Stock Market, while three declined for every two that advanced on the New York Stock Exchange. Some 968 million shares traded on the Big Board, 14 percent below the three-month daily average.
Dell fell US$2.38 to US$23. The biggest direct seller of personal computers expects profit of US$0.15 to US$0.16 a share in its fiscal third quarter, according to Chief Financial Officer James Schneider.
Dell was expected to earn US$0.17, according to analysts surveyed by First Call.
Ford fell US$1.77 to US$21.70. The second-largest automaker said it expects 2001 earnings of US$0.70 a share, 42 percent below estimates. Ford also said it will cut 4,000 to 5,000 salaried positions in North America by the end of the year. The company expects 75 percent of the job cuts to occur through early retirements.
Gap fell US$1.92 to US$21.43. The biggest US clothing chain said third-quarter profit may be less than the US$0.21 a share it earned a year earlier. Analysts surveyed by First Call had expected US$0.26.
Merrill Lynch & Co analyst Mark Friedman lowered his near- term rating to "neutral" from "accumulate." Scientific-Atlanta plunged US$3.77 to US$21.24. The maker of set- top boxes for cable television service withdrew its previous earnings forecast as demand fell, saying it is unable to forecast sales for the year ending in June.
Analog Devices fell US$0.56 to US$47.66. The chipmaker forecast profit of US$0.12 to US$0.14 a share in its fiscal fourth quarter. It was expected to earn 14 cents.
Semiconductor stocks led the S&P 500's slide. Intel Corp., the biggest chipmaker, fell US$2.09 to US$28.07; Texas Instruments Inc lost US$1.58 to US$33.14; and Applied Materials Inc slipped US$2.13 to US$42.57.
Cisco Systems Inc the largest maker of computer-networking equipment, fell US$0.87 to US$16.61.
Financial stocks were the third-biggest contributor to the S&P 500's decline. Merrill Lynch & Co fell US$1.88 to US$50.12 and hit its lowest price in more than 14 months. Morgan Stanley Dean Witter & Co lost US$1.80 to US$51.20, American Express Co dropped US$0.65 to US$37.50 and Citigroup slid US$1.28 to US$46.60.
Hewlett-Packard Co lost US$0.08 to US$24.05. Carly Fiorina, chief executive of the second-biggest computer maker, said sales will rise in the current quarter from the previous period as demand picks up before the holiday season.
The company said fiscal third-quarter profit fell to US$0.11 a share, excluding acquisition costs and a loss for selling a business, which beat analysts' estimates.
Microsoft Corp fell US$2.74 to US$61.88. A US appeals court denied the biggest software maker's request to delay remedy hearings in its antitrust battle with the government until the Supreme Court decides whether it will review the case.
Broadcom Corp, the largest maker of chips for cable modems, lost US$4.13 to US$37.06, its fourth-straight decline. Morgan Stanley Dean Witter & Co analyst Mark Edelstone said that 3Com Corp's decision to file a lawsuit Tuesday saying Broadcom defaulted on two quarterly interest payments suggests the relationship between the companies has become strained.
Broadcom and 3Com, a maker of computer-networking equipment, had agreed to develop, sell and market network interface cards together.
Maxim Integrated Products Inc fell US$2.69 to US$46.21. The chipmaker said fiscal first-quarter revenue would be below fourth quarter sales.
The company said it lost US$0.05 a share in the fourth quarter, compared with profit of US$0.29 a year earlier.
Comverse Technology Inc rose US$0.34 to US$29.85. Merrill Lynch analysts Tai Liani and Michael Ching said they expect the largest maker of telephone messaging software to keep displacing Lucent Technologies Inc in a few major accounts and to sell voice activation software to its voice-mail clients.
The analysts raised their rating to near-term "accumulate" from "neutral." Goldman Sachs, & Co yesterday raised Comverse to ``recommended list'' from "market outperform."
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to