Hon Hai Precision, Delta Electronics lead decliners

Stocks fell for a second day, paced by Hon Hai Precision Industry Co (鴻海精密), after Microsoft Corp cut its sales forecast this year because of weakening demand, reinforcing concern that growth in the personal computer industry will remain sluggish.

"PC-related companies' growth is going to lag," said Riche Huang, who manages US$2 million in Taiwan equities at President Investment Trust Corp (統一投信). He's been adding shares of plastics makers and automakers as they boost investments in China.

The TAIEX shed 35.51, or 0.7 percent, to close at 4,907.78. The index reversed an earlier gain of as much as 0.8 percent. The benchmark gained 1.2 percent this week.

Hon Hai, the nation's largest maker of PC parts, slipped NT$4, or 3.1 percent, to NT$124.50. Microsoft said sales will be US$31.9 billion to US$32.1 billion in the 12 months ending June 30. The average analyst estimate was US$32.5 billion, according to Thomson First Call.

Delta Electronics Inc (台達電子) dropped NT$0.90, 2.1 percent, to NT$42.80. The world's largest maker of equipment that transforms voltage in electronics products counts Microsoft among its customers.

About seven stocks fell for every two that advanced. The value of trade was NT$98.9 billion (US$2.8 billion), 11 percent higher than the daily average in the past three months.

China Motor Co (中華汽車), the nation's largest vehicle maker that's been increasing investments in China, rose NT$3, or 4.5 percent, to NT$70. The central bank said Taiwanese companies have invested US$66.8 billion in China since the government lifted restrictions in November 1990.

China Steel Corp (中鋼) fell NT$0.60, or 2.6 percent, to NT$22.50. The steelmaker, whose stock has risen 45 percent in the past three months, had its rating downgraded by Salomon Smith Barney Inc to "in-line" from "outperform," according to a research report sent to investors.

Chunghwa Telecom Co (中華電信) rose NT$0.50, or 1 percent, to NT$53. The company may have earned a net NT$4.80 a share last year, exceeding its forecast of NT$4.28 a share, a local newspaper reported.

Formosa Plastics Corp (台塑) rose NT$0.70, or 1.4 percent, to NT$49.20. Formosa Plastics Group, maker of chemicals used in plastic pipes, will focus on its investments in China and halt plans to sell shares in an initial public offering in the US, a local newspaper reported.

United Microelectronics Corp (聯電) fell NT$0.10, or 0.5 percent, to NT$22.20 after its customer, Advanced Micro Devices Inc, said fourth-quarter net loss widened as sales slid and costs rose.