Earnings Worries Sink Nasdaq - TheStreet

Earnings Worries Sink Nasdaq

The tech-heavy index falls 2.8% Friday, while the Dow sheds nearly 1%.
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Updated from 4:04 p.m. EST

Pessimistic earnings commentary from several technology leaders unleashed waves of selling on the

Nasdaq Friday, sending the index down almost 3% and dragging the broader market lower as well.

The Nasdaq finished down 55 points, or 2.8%, to 1930, while the

Dow Jones Industrial Average lost 78 points, or 0.8%, to 9772. The

S&P 500 was down 11 points, or 1%, to 1128.

Friday's negative tone was set Thursday night when top

Microsoft

(MSFT) - Get Report

executives said they'd grown more pessimistic about the PC industry despite solid second quarter results. The company raised its guidance for the current quarter but trimmed it for the second half of the calendar year. The software maker's shares ended down $3.64, or 5.2%, to $66.10 late in the session.

Friday's downward trajectory was eased but ultimately not reversed when computer-maker

Dell

(DELL) - Get Report

issued positive guidance for its fourth quarter. The company said it expects to earn 17 cents a share on $8 billion in revenue for the period, citing a strong consumer segment. Shares of the PC maker were lost 73 cents, or 2.5%, to $28.10.

The University of Michigan said consumer sentiment rose to 94.2 in the beginning of January from 88.8 in December, suggesting that the economy is closing in on a recovery. The data came in substantially higher than the consensus estimate, which called for a reading of 90. The Commerce Department said that the trade deficit was $27.9 billion in November, slightly below the $28.6 billion consensus.

Sun Microsystems

(SUNW) - Get Report

reported a second-quarter loss of $99 million, or 3 cents a share, a penny better than estimates. Revenue for the quarter came in at $3.108 billion. Its shares fell 25 cents, or 2%, to $12.12.

Nortel

(NT)

met lowered earnings forecasts for the fourth quarter but cautioned that sales would fall 10% in the first quarter, citing the lingering effects of the economic downturn. The company lost $506 million, or 16 cents a share, in the fourth quarter. Fourth-quarter sales were slightly higher than expected at $3.46 billion, but 60% below the $8.8 billion in sales it recorded a year ago. Nortel's shares shed 26 cents, or 3.4%, to $7.48.

Network Associates

(NETA)

, a maker of antivirus software, posted fourth-quarter earnings that blew away analysts' estimates. The company earned 23 cents a share on $259.2 million in revenue, compared to the consensus loss estimate of 8 cents a share on $205.5 million in revenue. Its shares were up $2.10, or 7.9%, to $28.81.

CheckPoint Software

(CHKP) - Get Report

advanced $1.10, or 3.2%, to $35.70.

Yahoo!

(YHOO)

could not escape Friday's tech fallout, as shares of the Internet portal dropped 92 cents, or 4.6%, to $19.20.

Another big tech mover was

Applied Micro

(AMCC)

, which lost 7.6% to $10.42 heading into the long holiday weekend.

Xilinx

(XLNX) - Get Report

topped Wall Street estimates for its fiscal third quarter, posting earnings of $23.5 million, or 7 cents a share before charges. The chipmaker said it sees revenue growth in the low single digits for the fourth quarter. Shares dropped $1.99, or 4.6%, to $41.07.

Tyco International

(TYCO)

said it will hold an analyst meeting on Tuesday Jan. 22 to address the recent M&A rumors that have depressed the company's stock.

IBM

(IBM) - Get Report

issued a disappointing profit report after the close Thursday, saying fourth-quarter sales fell about $1 billion short of forecasts. IBM was lost $6.13, or 5.1%, to $113.27.

3M

(MMM) - Get Report

posted fourth-quarter earnings of 98 cents a share, beating analysts' estimates by a penny. Revenue for the quarter fell 6.7% to $3.86 billion from the year-ago quarter, falling short of the consensus estimate of $3.89 billion. The stock tacked on $2.34, or 2.3%, to $106.86.

Read-Rite

(RDRT)

saw its shares tumble after warning that second-quarter revenue will drop significantly on a sequential basis and that it will record an operating loss in its recording head business. The stock was recently down $2.10, or 34.5%, to $3.99.

Foreign markets were mostly lower, with London's FTSE 100 losing 0.2% to 5127 and Germany's Xetra Dax down 0.6% to 5105. In Asia, Japan's Nikkei closed up 1.6% to 10,293, while Hong Kong's Hang Seng fell 0.4% to 10,973.

The 10-year Treasury note was recently up 7/32 to 100 26/32, yielding 4.89%.