Despite the continuously record-breaking price of oil last week, tech
issues also had a strong hand in their own demise. Stocks initially rallied
last week, following the widely expected boost in interest rates to 1.50%. The
Fed acknowledged the role high energy prices played in the recent slowdown in
the economy, but noted, "The economy nevertheless appears poised to resume a
stronger pace of expansion going forward." The positive sentiment quickly
waned, after Cisco posted a surge in its quarterly profit and forecast
lower-than-expected current-quarter sales. The tech bellwether also said its
inventories were rising and that customers were spending more cautiously. "It
shocked the market back into the same negative feelings that we had last week
-- that the economic data is weaker than expected and the economy is not
growing enough to support the earnings growth," said John Caldwell, chief
investment strategist at McDonald Financial Group, to Reuters News. National
Semiconductor and Kulicke & Soffa also plunged on their respective quarterly
revenue warnings. Out of the computer hardware industry, Hewlett-Packard
posted lower-than-expected quarterly earnings due to weak results in its
servers and storage products used by large businesses and organizations. For
the current quarter, the Dow member sees its profit missing analysts'
expectations. The tech sector was given some relief at the week's end in the
form of Dell's quarterly results. The firm posted a higher profit, as demand
for personal computers and servers grew stronger globally. Dell also sees
continued increases in sales and profits in the current quarter. This week,
technology issues have another shot at redeeming themselves, with earnings due
from Applied Materials, Ciena and Network Appliance, amongst others.
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial Corporate Group
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