SAN FRANCISCO - Shares of the world’s hottest technology
stocks joined hard-pressed financial stocks in a sharp sell-off on Monday as
investor fears mounted that the crisis on Wall Street was dampening US consumer
demand.
Apple Inc., tumbled 18 percent to its lowest close in 16
months after two brokerages downgraded the stock on slowing global consumer
demand and a warning by electronics retailer Circuit City of a looming slump in
holiday sales.
Other brand names such as Blackberry-maker Research in
Motion, Google Inc., and Nokia also suffered double-digit percentage price
declines following the failure by the US Congress to pass a financial bailout
plan.
Apple, which traded near $200 at the end of last year, fell
to $100 in intraday trading, while Google slipped below $400 for the first time
in two years. On Nasdaq, Apple closed down 17.9 percent, or $22.98, at $105.26
and Google ended off $50.04, or 11.6 percent, at $381.00.
"Investors are no longer selling their losers in tech but
have turned to selling stocks that still have meat on the bone," Scott Kessler,
head of S&P’s tech equities research.
Microsoft shares fell 8.7 percent to $25.01. Brad Smith, the
company’s general counsel, issued a statement calling on Congress to strongly
reconsider the bailout package to "re-instill confidence and stability in the
financial markets."
The Morgan Stanley Hi-Tech index of major technology stocks
closed down 9.3 percent as all 35 components slumped with the broader Nasdaq
Composite index’s drop of 9.1 percent — its worst one-day percentage drop since
April 2000, the start of the last bear market for technology stocks.
Analysts and investors said some of the hardest hit stocks
were those of companies that had been enjoying strong growth despite the US
housing crisis. As economic gloom deepens, the Apples and the Googles become
vulnerable.
"Nothing has changed fundamentally in many of these stocks,"
said Jeffrey Lindsay, an analyst who follows Internet stocks for brokerage
Sanford C. Bernstein. "But everyone is trotting out their bear market
scenarios," he said.
"If there are any more bank failures, then the global economy
is going to be in a very difficult position," Lindsay said. "As long as the
bailout doesn’t happen, all the bear theses start to look true," he said.
Lindsay rejects the bear market thesis, noting that stocks
such as Google and even Yahoo Inc have billions of cash on hand to fund
operations and no debt on their books. Nonetheless, shares of Yahoo fell to
five-year lows, down 10.8 percent, to $16.88.
"The cockroaches of this particular nuclear winter — if this
is one — will be Internet stocks," the analyst said.
Not all technology stocks were equally hard pressed.
International Business Machines Corp, which serves big businesses but has
aggressively diversified into international markets in recent years, fell only
4.2 percent to $114.46.
Analysts said IBM is partly benefiting from being added last week to the US
Securities and Exchange Commission’s list of stocks that can’t be sold short —
an investment strategy to profit from a stock’s decline. - Reuters
