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Motherboard Malaise Trips Tech Stocks

Tech stocks ended Friday's session in retreat, following a bearish analyst note about plunging demand for PC motherboards.

The news took a toll on virtually every player in the PC ecosystem, pressuring shares of Intel (INTC - Get Report), Advanced Micro Devices (AMD - Get Report), Dell (DELL - Get Report) and Micron (MU - Get Report), among others.

The Philadelphia Stock Exchange Semiconductor Sector Index closed off about 2% to remain in its six-week trading range.

According to news reports, Goldman Sachs analyst Henry King released a note that Taiwanese makers of PC motherboards have seen a sharp drop in demand in October, leading him to slash his monthly shipping estimate.

A motherboard is a printed circuit board on which all of a PC's main chips are attached, from the microprocessor to memory chips and power management circuits. A drop in motherboard demand is bad news for the chipmakers whose products sit on the boards, as well as for PC sales in general, since it signals weak end-market demand for computers.

Intel, AMD and Micron were all down at least 3% late Friday. Dell and H-P each slipped more than 1%.

National Semiconductor (NSM - Get Report) and International Rectifier (IRF), both of which make components for PCs, slid 4.9% and 2.9%, respectively.

The PC market is already under pressure, owing to the delay of Microsoft's (MSFT - Get Report) new Vista operating system, the high PC saturation of the U.S. market and an increasing array of electronic gadgets fighting for consumers' dollars.

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SYM TRADE IT LAST %CHG
DELL $0.00 0.00%
IRF $39.98 0.00%
AMD $2.28 0.00%
INTC $33.45 -0.30%
NSM $20.21 -0.44%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

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