The Night Watch: Warnings Season Never Ends, Tech's Outlook Looking Even Bleaker

Updated from 6:23 p.m. EST

As if the semiconductor industry needed any more profit warnings, chipmakers Altera (ALTR Quote), Avanex (AVNX Quote) and Chartered Semiconductor (CHRT Quote) all cut their projections after the closing bell tonight.

The announcements ought to make for a swell session for the sector tomorrow. As warnings from components Motorola (MOT Quote), Texas Instruments (TXN Quote) and Micron Technology (MU Quote) have hit Wall Street in recent days, the Philadelphia Stock Exchange Semiconductor Index has been on a decline, dropping 5.1% today.

Looking ahead, trading on the futures market tonight suggests a weak open for technology stocks tomorrow. In recent action, the Nasdaq 100 Securities were down 9 to 1960, about nine points below fair value and suggesting a sluggish start for the Nasdaq tomorrow. At last look, the Nasdaq 100 (QQQ Quote) was off 0.44% to $48.78 on Island ECN.

Tonight, Altera -- a specialty chipmaker -- cautioned that it expects revenue in its fiscal first quarter to drop 20% from fourth-quarter levels, as a result of an inventory correction and a slowdown in demand. Shares of the semiconductor stock traded down 4.8% to $22.25 on Instinet.

"An industry-wide inventory correction began in the fourth quarter, and now reduced end-market consumption is exacerbating the impact of that correction," Altera said in a statement. "The slowdown in end-market activity is prolonging the inventory correction, but we believe that moderate sequential revenue growth will resume in the second half."

Separately, Avanex -- a manufacturer of photonic processors that increase the speed and capacity of fiber-optic networks -- scaled back its forecasts for its fiscal third quarter and for fiscal 2001, sending its stock down 20.6% to $19 on Instinet.

After the bell, Avanex lowered its third-quarter profit projection to 2 cents to 3 cents per share, compared to consensus estimates for earnings of 6 cents. For fiscal 2001, the company expects to come in between 15 cents and 16 cents per share, below analysts' target of 25 cents per share.

And finally, Chartered Semiconductor -- a telecommunications chip supplier -- lowered first-quarter earnings and revenue projections, citing weak economic and market conditions. In recent trading, the stock was down 19.4% to $26 on Instinet.

The chipmaker expects first-quarter revenue to fall about 35% below the fourth-quarter's outcome. Previously, Charter had expected a 15% to 20% drop. Additionally, the chipmaker expects to post a loss of 22 cents to 24 cents per share, compared to prior forecasts of a 4- to 6-cent per share profit.

Rivals in the semiconductor sector have been punished on the news. Shares of specialty chipmaker Xilinx (XLNX Quote) -- which competes most directly with Altera -- sank 4.5% to $37 on Instinet.

Elsewhere on the electronic trading platform, Applied Materials (AMAT Quote) shed 2.8% to $43.75, Intel (INTC Quote) slid 0.4% to $28.88, PMC-Sierra (PMCS Quote) dropped 0.5% to $37.75 and Texas Instruments (TXN Quote) lowered 0.3% to $29.90.

Among large-cap networking stocks trading on Island ECN tonight, Cisco Systems (CSCO Quote) lowered 0.8% to $23.81, JDS Uniphase (JDSU Quote) advanced 0.5% to $27.94 and Juniper Networks (JNPR Quote) lost 1.4% to $62. The American Stock Exchange Networking Index finished the regular session down 5.9%.

10 most active stocks on Instinet (6:30 p.m. EST)
Company	Price	Change	Session Volume
Cisco Systems (CSCO Quote)	23.56	-0.44	763,318
Avanex (AVNX Quote)	19	-4.94	456,580
Xilinx (XLNX Quote)	37	-1.75	341,470
Cintas ( CTAS Quote)	43.50	+0.75	307,500
Microsoft ( MSFT Quote)	59.38	--	227,582
JDS Uniphase ( JDSU Quote)	27.88	+0.06	213,074
Storage Networks ( STOR Quote)	15.81	-0.13	181,000
Applied Materials ( AMAT Quote)	43.75	-1.25	175,969
Intel ( INTC Quote)	28.88	-0.13	171,144
i2 Technologies (ITWO Quote)	27.56	--	165,348

This information is provided by Instinet, a wholly owned subsidiary of Reuters (RTRSY Quote). For further information, please contact Instinet at www.instinet.com.

10 most active stocks on Island ECN (7:30 p.m. EST)
Company	Price	Change	Session Volume
Avanex (AVNX Quote)	18.98	-4.95	472,482
Cisco Systems (CSCO Quote)	23.81	-0.19	204,078
Nasdaq 100 (QQQ Quote)	48.78	n.a.	91,227
JDS Uniphase (JDSU Quote)	27.94	+0.13	86,330
Cintas ( CTAS Quote)	42.50	-0.25	85,982
i2 Technologies ( ITWO Quote)	27.90	+0.34	69,839
Juniper Networks (JNPR Quote)	62	-0.86	67,209
Xilinx (XLNX Quote)	37	-1.75	60,049
WebVan (WBVN Quote)	0.28	--	57,368
Sun Microsystems (SUNW Quote)	19.63	-0.19	55,390

Island ECN offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EST.

Confused? TheStreet.com explains how the rules change when the sun goes down in Investing Basics: Night Owl, a section devoted to after-hours trading.