Sector Watch: Juniper Warning Leads Networkers Lower
Networkers were in the doldrums this morning after a
preopen earnings confession from
Juniper Networks
(JNPR) - Get Report
, whose stock was lately one of the biggest losers on the
Nasdaq.
The
American Stock Exchange Networking Index
recently dropped 4.1%, while Juniper tumbled 18% to $38.27. The company became the latest to
forecast poorer results, saying this morning it sees sharply lower-than-expected revenue in the second quarter.
J.P. Morgan
analyst Greg Geiling recently cut his rating on the company to market performer from long-term buy. The analyst said he believes the service provider capital expenditure environment is unlikely to improve in the second half of the year and will therefore "continue to plague" Juniper's results over the next few quarters.
"In broad terms
Juniper's warning is causing further concern today for other investors as it's a warning by a key company," said Dan Ament, associate vice president and investment executive at
Dain Rauscher
. "I would say in general the market appears to be working through many markdowns and warnings, and it's something we can overcome."
The contagion was lately spreading to other networkers, including those who recently issued their own profit warnings.
Cisco Systems
(CSCO) - Get Report
was off 5% to $20.76.
3Com
(COMS)
recently fell 2.5% to $5.52. After Thursday's closing bell, 3Com lowered its fourth-quarter revenue guidance, citing worsening business conditions. The company also said it plans to discontinue its line of consumer cable and DSL modems in a bid to reach profitability.
Nortel
(NT)
, which earlier today touched a 52-week low, recently dropped 4.6% to $12.53.
Redback Networks
(RBAK)
and
Sycamore Networks
(SCMR)
also lost ground, while
Ciena
(CIEN) - Get Report
fell 8.6% to $56.60.
Tellabs
(TLAB)
lately gave up 5.6% to $31.
"What's most important to me is how the market reacts to news," said Mike Hurley, technical analyst at
Wit Soundview
. "It's a little bit too early to tell right now.
The sector has been trying to stabilize and how it handles the current news over the next few days will be an important window."