Wall Street Technology shares mostly flat, shrugging off U.S. data
SAN FRANCISCO (AFX) - Prices of technology shares were broadly unchanged in mid-session trading, as investors overlooked some weaker-than-expected U.S. economic data in addition to profit warnings from sector bellwethers JDS Uniphase and Compaq, dealers said. At 12.15 pm in New York trading, the Nasdaq composite edged 1.68 points lower to 2,057.64 with the Nasdaq 100 up 1.05 points at 1,812.94 and the Philadelphia semiconductor index (SOX) rising 13.91 to 644.73. In the broader market, the DJIA rose 1.65 points to 10,533.88, with the S&P 500 falling 3.55 to 1,220.81. Before the opening bell, the Conference Board said its consumer confidence index fell to 109.2, significantly lower than analysts had been forecasting. According to Bill Meehan, market strategist at Cantor Fitzgerald, investors interpreted the weak data as increasing the likelihood of further aggressive easing of U.S. monetary policy to boost the ailing economy. "The weaker consumer confidence data left the market very confident the Federal Reserve will lower rates again at its next meeting," scheduled for May 15, said Meehan. The strategist said the profit warnings from Compaq and JDS Uniphase would not have caught investors unawares. "It's not a shock that first-quarter earnings are not good, ... nor that the current quarter is weak. If the Fed keeps hammering this thing, then we will have an economic recovery probably sooner than later," said Meehan Before the opening bell this morning, JDS Uniphase released in-line third-quarter earnings, but lowered its guidance for the fourth quarter and announced 5,000 job cuts. The 20 pct reduction in headcount would entail a charge of between 375 and 425 mln usd, said JDS Uniphase. The company reported third-quarter EPS of 14 cents, up from 11 cents the year-earlier quarter and in line with the First Call/Thomson Financial consensus of analysts estimates. The stock slumped 2.39 or 9.9 pct to 21.79. Lucent Technologies gained 1.05 or 11.4 pct to 10.25. The telecom equipment group admitted that a larger-than-expected restructuring charge had plunged it into a multi-billion dollar loss in the three months to March. Excluding results from the recently spun-off Agere Systems Inc, Lucent said it lost 3.7 bln usd, or 1.08 usd a share, due to a 2.7 bln usd charge arising from a business overhaul and equity write-downs. Agere lost 0.16 to 6.99. Novellus rose 2.42 to 54.56 after analysts reacted positively to the chip maker first-quarter results, which were slightly higher than anticipated. Compaq fell 2.85 to 17.80, after it reported first quarter profits that missed already-lowered forecasts, and warned that future earnings would also fall well below expectations. After yesterday's close, Compaq said earnings before restructuring charges came in at 12 cents a share, a penny lower than First Call/Thomson Financial consensus estimates, as demand for PCs and servers weakened in the face of a downturn in the wider economy. The group warned the future would be just as bleak, saying it expects second-quarter profit of only 5 cents a share, way down on the 17-cent consensus analyst estimate. IBM rose 1.30 to 113.30 after approving the allocation of 3.5 bln usd to repurchase stock, and declared a quarterly cash dividend of 14 cents, an increase of 1 cent compared with the prior quarter. Oracle rose 0.41 to 17.55 after announcing a 3 bln usd addition to its own share buy-back programme. In the internet sector, ExciteAtHome rose 0.18 to 4.05, after its first-quarter results came out broadly in line with analysts lowered expectations. Amazon added 0.31 to 16.51. The company is scheduled to release first-quarter results after the market close today.
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