Guilty by Association: Fallout Spreads After Nokia Warning - TheStreet

The wireless sector and its telecom and equipment brethren sank today under the weight of

Nokia's

(NOK) - Get Report

preopen

earnings warning, and market watchers said the cell phone maker's confession offers a foreboding glimpse of the coming months.

The Espoo, Finland, mobile phone giant, which lowered its second-quarter guidance because of flimsy market conditions, recently tumbled 19% to $23.28 in trading on the

New York Stock Exchange. The stock, hovering close to its 52-week low of $20.55 and sharply off the 52-week high of $62.50, closed Monday at $28.71. Meanwhile, wireless stocks across the board were

losing ground, with the

Philadelphia Stock Exchange Wireless Telecom Sector

off by 5%, while the

Dow Jones Wireless Communication Index

dropped 3.2%.

Sweden's

Ericsson

(ERICY)

, one of the most heavily-traded outfits on the

Nasdaq, lately tumbled 5.8% to $5.19, while

Motorola

(MOT)

slipped 8.3% to $13.63. Wireless service providers also took a hit.

Sprint PCS

(PCS)

was off 4% to $20.59, and

AT&T Wireless

(AWE)

dropped 2.8% to $15.72, but

Verizon

(VZ) - Get Report

gained 0.1% to $53.84.

"

Nokia's warning is one of the first major warnings since

Sun Microsystems'

(SUNW) - Get Report

warning a few weeks ago," said Giri Cherukiri, head trader at

Oak Brook Investments

. "It could foreshadow more earnings warnings from tech stocks and the hardware companies. Today's news is a sign that things aren't going to pick up in the immediate future."

Brett Gallagher, head of U.S. equities and deputy chief investment officer at

Julius Baer Investment Management

, an asset management and investment advisory firm, holds a similar view. "We did not believe that the corrections we've had thus far in the market fully reflect the reality," he said. "Investors are still pricing in quicker recovery than expected."

Among other names losing ground,

Nextel Communcations

(NXTL)

lately gave up 4.2% to $14.17, while cell phone technology maker

Qualcomm

(QCOM) - Get Report

lost 6.1% to $56.18.

France Telecom

(FTE)

, was off 2% to $49.29, after touching a 52-week low of $48.70 earlier today.

Deutsche Telecom

(DT) - Get Report

, meanwhile, slipped 1.2% to $19.91.

"Nokia is obviously the major story of the day, and everything related to Nokia has been taken down today, including the infrastructure players like Qualcomm," said Gallagher. "

But whether or not it's a surprise is another issue. Our view is that we're going to continue seeing negative surprises on the wireless side, but less so from people like Nokia and more so from the people providing infrastructure for Nokia, like chipmaker

Texas instruments

(TXN) - Get Report

," said Gallagher.

Texas Instruments recently shed 9% to $33.45. Communications chipmaker

Applied Micro Circuits

(AMCC)

lost 5.8% to $16.89, and integrated circuits developer

RF Micro Devices

(RFMD)

fell 9.3% to $23.95.