While much attention on Sep. 29 was fixed on the failed bailout vote in Congress and its impact on the Dow Jones industrial average, tech stocks also came under pressure.
The technology-heavy Nasdaq dropped 199.61 points, or 9 percent, to 1983.73, the third-largest percentage decline ever. Computer stocks alone lost about US$113 billion in market value. The Sep. 29 tech-stock rout was eclipsed only by the Black Monday crash on Oct. 19, 1987, when the Nasdaq plummeted more than 11 percent, and Apr. 14, 2000, when it tumbled 9.7 percent.
Among tech stocks, the most notable loser was computer and consumer electronics maker Apple, the subject of at least two analyst downgrades. Apple fell 22.98, or more than 17 percent, to 105.26, the company's fifth-biggest decline in percentage terms. The rout wiped US$20 billion from Apple's market capitalization and came eight years to the day after Apple's biggest-ever one-day percentage decline--on Sep. 29, 2000, it lost more than half its value.
Investors sold tech on concerns that, barring a bailout for the financial sector, cutbacks in lending will cause companies to trim or delay orders on computers, software, networking gear, and other tech products. Wall Street's woes are also depressing consumer sentiment and could make for a bleak end-of-year selling season for consumer electronics makers and online retailers. "Tech is not at the epicenter of the problem," says Doug Freedman, managing director at American Technology Research in San Francisco. "[But] tech definitely carries higher-than-average multiples and above-average risk for the reward. We're at a point where people have little tolerance for risk."
Figuring on fewer shoppers
RBC Capital Markets analyst Michael Abramsky cut his rating on Apple, citing survey data showing consumers are less willing to spend on consumer electronics. At Morgan Stanley, analyst Kathryn Huberty cut her rating because of pressure on Apple's gross margins--costs are rising for back-to-school promotions and other products. Apple shares finished the day down nearly 48 percent from their all-time high of 202.96 on Dec. 27, 2007.
A Sept. 26 report from Andy Hargreaves at Pacific Crest Securities in Portland, Ore., claimed that Apple has curtailed manufacturing orders for its iPhone, cutting its target to 14 million from 18 million. Hargreaves' note followed reports that Apple was reducing its purchases of memory chips.
Shares of Research In Motion, maker of the BlackBerry wireless device, dropped more than 12 percent, to 61.73. That followed declines earlier in the month after RIM issued a forecast below analysts' estimates. RIM has lost 58 percent since reaching a 52-week high on June 19.
Computer makers also came under fire. Analyst Doug Reid of Thomas Weisel Partners downgraded computer hardware giants Dell and Hewlett-Packard, while Wachovia analyst David Wong downgraded the entire computer hardware sector. HP fell 3.26, or nearly 7 percent, closing at 44.55, while Dell lost 1.59, or more than 9 percent, to finish at 15.41. Hard drive maker Seagate Technology, newly listed on the Nasdaq, fell 0.68, or more than 5 percent, to close at 11.74. Software giant Microsoft fell more than 8 percent.
No one was immune
Other losers included chipmaker Intel, which fell 1.93, or more than 10 percent. Wireless chipmaker Qualcomm dropped 13 percent, as did cable TV provider Comcast. Software giant Oracle dropped 1.85, or nearly 9 percent. Cisco Systems fell 2.03, or more than 8 percent. Satellite radio concern Sirius XM fell more than 18 percent to close at 0.62 a share. It has been trading for less than 1.00 a share since Sept. 11 and remains in danger of being delisted.
Internet companies were not immune. Search giant Google saw its stock drop 50.04, or 11.6 percent, ending the day on 381, its first finish below the 400 mark in two years.
Online retailer Amazon fell more than 10 percent, while eBay dropped 11 percent. Yahoo also lost more than 10 percent.
Play video
There are currently no comments for this post.