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TECH STOCKS FALL AFTER EARNINGS

19 Jan 05. The WALL STREET JOURNAL ONLINE reported that solid earnings from technology titans Yahoo and International Business Machines couldn’t pull tech stocks higher Wednesday as investors showed disappointment in reports from other firms, including Motorola and Lucent Technologies. (See: BUSINESS NEWS)

After a sharp sell off in the final hour of trading, the Nasdaq Composite Index finished down 32.45, or 1.5%, to 2073.59. Meanwhile, Morgan Stanley’s high-tech index lost 10.83 points, or 2.2%, to 477.30, and the Nasdaq 100 Index of nonfinancial stocks slid 27.84, or 1.8%, to 1545.65. Total volume on the Nasdaq Stock Market was 2.21 billion shares. Decliners outpaced advancers: 2,134 to 994.

Meanwhile, IBM plummeted $1.80, or 1.9%, to $93.10 on the New York Stock Exchange, even as the computer giant said fourth-quarter net income rose 12% to $3.04 billion, boosted by the weak dollar and robust sales in its services and software businesses, surpassing Wall Street’s expectations. The strong earnings prompted several analysts to raise their earnings and revenue forecasts and price targets for the company. “We advise investors to take advantage of any near-term weakness in the shares to add to positions,” Prudential Equity Group said in a research note.

Among other companies that reported earnings, Lucent Technologies slid 28 cents, or 7.6%, to $3.42 on the Big Board after the company said fiscal first-quarter earnings fell 49%, as declines in its wire line business offset growth in its wireless unit.

Shares of Advanced Micro Devices closed flat at $15.50 on the Big Board after the chip maker swung to a loss and said it expects processor sales to be flat to down slightly in the typically slow current quarter. AMD also believes flash memory sales will be down in the first quarter, due to imbalance in supply and demand and continued pressure on average selling prices.

Motorola shares dropped $1.23, or 7.1%, to $16.20 on the Big Board as the company projected first-quarter earnings of 17 cents to 20 cents a share on sales of $7.5 billion to $7.9 billion. Analysts expect a challenging market in handsets this year.

Shares of Teradyne stumbled 98 cents, or 6.4%, to $14.36 on the Big Board. The semiconductor firm said it swung to a profit in the fourth quarter as revenue rose 5.4% amid lower expenses, but the company said customer demand remains tentative.

Among smaller firms, Plantronics shed $3.50, or 8.4%, to $38.15 on the Big Board after the headset maker reported third-quarter earnings of $24.4

m, or 48 cents a share. The company sees fiscal fourth-quarter earnings of 45 cents to 49 cents a share, excluding an anticipated gain on taxes of four cents to six cents. Rambus dropped $3.46, or 16.2%, to $17.85 on Nasdaq after the chip firm said net income fell 24% in the fourth quarter as the company recorded higher litigation expenses.

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