Tech stocks take a thrashing

For high tech investors, it was the ending to the week from hell.

Tech stocks plunged today, as investors worried about a possible trade war with Japan and reacted to some disappointing earnings results. A drop in bonds following a brisk rise in September housing starts also weighed on investor concerns.

IBM, Compaq Computer Corp. and Dell Computer Corp. each fell more than $3. Microsoft Corp. lost more than $1 on Friday.

The slaughter picked up as the day went along.

The Dow Jones Industrial Average, which was down more than 150 points, in the early afternoon, pared its loss to finish down 91.85. The tech-laden NASDAQ index, which was off more than 40 points earlier in the day, finished the day down 30.60, or 1.8 percent.

Leading a Wall Street trouncing of tech stocks, shares of Seagate Technology Inc. lost ground as investors digested the company's dismal earnings report.

By midday, the company's stock was down more than $4.

Seagate announced a $240.2 million loss in its first quarter ended October 3. A year ago, the giant disk drive maker earned $129.4 million. Revenues fell to $1.89 billion from $2.06 billion.

The company blamed the stunning shortfall on slow sales of its higher margin products as well as on a large loss due to foreign currency dealings.

During the quarter, Seagate took several one-time charges relating to research and development expenses as well as its acquisition of Quinta Corp. Seagate was also forced to cover foreign currency hedging. The company, which operates plants in Thailand and Malaysia, announced that it had temporarily stopped drawing up purchasing contracts on some Southeast Asian currencies.

Excluding all the charges, Seagate's quarter was still a bust. It posted earnings of 8 cents per share but analysts surveyed by First Call had expected the company to come in with 37 cents per share.

Bear Stearns cut its rating on Seagate, based in Scotts Valley, Calif., to neutral.

Sun Microsystems was another casualty, Sun Microsystems lost 3 15/16 after reporting disappointing earnings.

"That's probably going to weigh on the tech stocks again, and if tech stocks get battered then that pulls down the rest of the market," said analyst Hildegard Zagorski of Prudential Securities.

Stocks were also rattled Thursday after the U.S. Federal Maritime Commission voted to order Japanese ships to be denied entry at American ports because shippers did not pay fines.

"I am not really sure how serious this Japanese trade dispute is," said Zagorski.

But some analysts were watching for the market's next turn after the Dow index closed Thursday below the 8,000 level for the first time this month.

"We are approaching levels that could mean technical short-term trouble for the market," said Peter Cardillo, director of research at Westfalia Investments.

The Commerce Department reported that housing starts climbed 7.9 percent to a seasonally adjusted annual rate of 1.5 million in September -- well above Wall Street economists' forecasts for a 1.4 million rate -- after revised drops of 5.1 percent in August and 2.5 percent in July. The Treasury's key 30-year bond lost 13/32, which raised its yield to 6.42 percent from 6.40 percent at Thursday's close.

Reuters reports were included in this story.

For high tech investors, it was the ending to the week from hell.

Tech stocks plunged today, as investors worried about a possible trade war with Japan and reacted to some disappointing earnings results. A drop in bonds following a brisk rise in September housing starts also weighed on investor concerns.

IBM, Compaq Computer Corp. and Dell Computer Corp. each fell more than $3. Microsoft Corp. lost more than $1 on Friday.

The slaughter picked up as the day went along.

The Dow Jones Industrial Average, which was down more than 150 points, in the early afternoon, pared its loss to finish down 91.85. The tech-laden NASDAQ index, which was off more than 40 points earlier in the day, finished the day down 30.60, or 1.8 percent.

Leading a Wall Street trouncing of tech stocks, shares of Seagate Technology Inc. lost ground as investors digested the company's dismal earnings report.

By midday, the company's stock was down more than $4.

Seagate announced a $240.2 million loss in its first quarter ended October 3. A year ago, the giant disk drive maker earned $129.4 million. Revenues fell to $1.89 billion from $2.06 billion.

The company blamed the stunning shortfall on slow sales of its higher margin products as well as on a large loss due to foreign currency dealings.

During the quarter, Seagate took several one-time charges relating to research and development expenses as well as its acquisition of Quinta Corp. Seagate was also forced to cover foreign currency hedging. The company, which operates plants in Thailand and Malaysia, announced that it had temporarily stopped drawing up purchasing contracts on some Southeast Asian currencies.

Excluding all the charges, Seagate's quarter was still a bust. It posted earnings of 8 cents per share but analysts surveyed by First Call had expected the company to come in with 37 cents per share.

Bear Stearns cut its rating on Seagate, based in Scotts Valley, Calif., to neutral.

Sun Microsystems was another casualty, Sun Microsystems lost 3 15/16 after reporting disappointing earnings.

"That's probably going to weigh on the tech stocks again, and if tech stocks get battered then that pulls down the rest of the market," said analyst Hildegard Zagorski of Prudential Securities.

Stocks were also rattled Thursday after the U.S. Federal Maritime Commission voted to order Japanese ships to be denied entry at American ports because shippers did not pay fines.

"I am not really sure how serious this Japanese trade dispute is," said Zagorski.

But some analysts were watching for the market's next turn after the Dow index closed Thursday below the 8,000 level for the first time this month.

"We are approaching levels that could mean technical short-term trouble for the market," said Peter Cardillo, director of research at Westfalia Investments.

The Commerce Department reported that housing starts climbed 7.9 percent to a seasonally adjusted annual rate of 1.5 million in September -- well above Wall Street economists' forecasts for a 1.4 million rate -- after revised drops of 5.1 percent in August and 2.5 percent in July. The Treasury's key 30-year bond lost 13/32, which raised its yield to 6.42 percent from 6.40 percent at Thursday's close.

Reuters reports were included in this story.