Stocks End Rough Day With Losses

Weakness in semiconductor and software shares drag down the averages.
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Updated from 4:03 p.m. EST

Blue-chips sustained moderate losses Tuesday, but tech shares were slammed as weakness in the semiconductor, telecommunications and software sectors dragged down the

Nasdaq.

Negative comments from analysts and gloomy earnings forecasts overshadowed

Amazon.com's

(AMZN) - Get Report

surprisingly strong performance in the fourth quarter. The Nasdaq lost 47.81 points, or 2.5%, to 1882.53. The

Dow Jones Industrial Average gave up 58.05 points, or 0.6%, to 9713.80, and the

S&P 500 was off 8.27 points, or 0.7%, at 1119.31.

Amazon.com made good on its promise to turn a profit in the fourth quarter and did it using generally accepted accounting principles, not the pro forma treatments it has pointed to in the past. The online retailer recorded net income of $5 million, or 1 cent a share, citing a strong holiday shopping season. Revenue for the quarter rose 15% to $1.12 billion from $972 million a year earlier. Shares of Amazon gained $2.44, or 24%, to $12.60.

Kmart

(KM)

filed for Chapter 11 bankruptcy protection after two suppliers,

Scotts

(SMG) - Get Report

and

Fleming

(FLM) - Get Report

, halted merchandise shipments for nonpayment. Kmart shares lost $1.05, or 60.3%, to 69 cents.

Chipmakers were under heavy selling pressure Tuesday afternoon with the Philadelphia Semiconductor Index down nearly 4%.

Intel

(INTC) - Get Report

shed $1.78, or 5.3%, to $31.70.

Software giants

Oracle

(ORCL) - Get Report

and

Microsoft

(MSFT) - Get Report

lost 3.3% and 2.5%, respectively.

Network storage equipment maker

Sun Microsystems

(SUNW) - Get Report

was the most active stock on the Nasdaq, falling $1.16, or 9.6%, to $10.96.

Ariba

(ARBA)

posted its fourth straight quarterly loss Tuesday and said revenue fell 67% from the year before, as persistently weak technology spending continued to plague the B2B outfit. The company posted a loss of $6.9 million, or 3 cents a share, in the first quarter, compared with a profit of $14 million, or 5 cents last year. The results exceeded analysts' estimates of a loss of 5 cents a share. The stock dropped 87 cents, or 12.8%, to $5.93.

Analysts at Sanford Bernstein upgraded

Wal-Mart

(WMT) - Get Report

shares to outperform from market perform, saying that the company should gain market share in light of the Kmart bankruptcy. Shares of the retail giant rose $1.66, or 3%, to $58.01.

Merck

(MRK) - Get Report

met analysts' fourth-quarter earnings targets, posting a profit of 81 cents a share. Revenue for the quarter rose 10% to $12.6 billion. But slumping sales of its arthritis drug Vioxx and increased competition from generic drugmakers weighed on Merck's performance. The company reiterated its cautious outlook on 2002, saying it expects little or no earnings growth. Shares traded up $1.29, or 2.2%, to $59.29.

Consumer products manufacturer

Johnson & Johnson

(JNJ) - Get Report

posted a fourth-quarter profit of $1.2 billion, or 39 cents a share, in line with Wall Street's estimates. The results excluded special charges related to the acquisition of

Alza

, a biotech company. J&J shares traded down 58 cents, or 1%, to $59.12.

Lucent

(LU)

posted a first-quarter loss of $757 million, or 23 cents a share, beating analysts' lowered expectations by a penny. The telecommunications equipment maker said it expects second-quarter revenue to grow 10% to 15% as it looks to recover from a long spending slump in the industry. The company's shares climbed 25 cents, or 3.7%, to $6.94.

Willamette

(WLL) - Get Report

was climbing after agreeing to be acquired by rival paper manufacturer

Weyerhaeuser

(WY) - Get Report

for $6.1 billion, or $55.50 a share. The move put an end to Willamette's merger negotiations with

Georgia-Pacific

(GP)

. Willamette's shares surged $8.02, or 17%, to $55.12.

Several Wall Street brokerages issued cautious comments on

Motorola

(MOT)

, sending shares of mobile handset makers lower. Motorola's shares were down 72 cents, or 5.1%, to $13.53.

Tyco International

(TYC)

was among the most actives after the company set plans to divide its business into four separately traded companies. The company said the transactions will eliminate $11 billion in debt and unlock "tens of billions" in shareholder value. Tyco's shares climbed $1.10, or 2.4%, to $47.55.

International Paper

(IP) - Get Report

posted a loss of $572 million, or $1.19 a share, in the fourth quarter, citing lower paper prices and weak demand for its products. Excluding charges, the company reported earnings of $58 million, or 12 cents a share, exceeding the consensus estimate of 3 cents a share. The company's shares climbed 69 cents, 1.8%, to $38.91.

Cyberonics

(CYBX)

announced disappointing results in a clinical study of its treatment for chronic depression. The stock responded accordingly, falling $16.39, or 56.1%, to $12.83.

On the economic front, the Conference Board said the leading indicators rose 1.2% in December, moderately ahead of the 0.7% consensus.

Foreign markets were mixed with London's FTSE 100 gaining 0.2% to 5149 and Germany's Xetra Dax falling 0.5% to 5046. In Asia, Japan's Nikkei closed down 2.2% to 10,051 due to weakness in the semiconductor sector, while Hong Kong's Hang Seng fell 1.8% to 10,798.

Treasury issues were lower. Around 4 p.m. EST, the 10-year note was losing 4/32 to 100 22/32, yielding 4.91%.