John J. Edwards III
The markets today are like that old McDLT at
: The hot side's hot and the cool side's cool.
The tech side remains coldly congealed, as drive makers and the
Nasdaq Composite Index's
big bellwether struggle, while the warmer
Dow Jones Industrial Average
took some time to heat up but lately has started to sizzle. The Nasdaq is down more than 8 and the Dow is up almost 50.
The Nasdaq and the general tech sector are taking hits from all corners, as stalwart
dips on its forecast of a "monumental" product transition,
infects its four-letter networking brethren with its poor earnings outlook and
does the same to its disk-drive cohorts.
Some traders said the doom and gloom in tech was a bit overdone. "I do believe that the second quarter is normally the weak quarter for these companies," one said, indicating that the Cabletron and Seagate disappointments aren't so terribly shocking. Seagate last night said its earnings in the fourth quarter ending June might fall short of the $1.01 it made in the third quarter. And the
consensus fourth-quarter estimate on the company is $1.06.
Another trader offered some absolution for Intel, saying Wall Street's faithful failed to take seasonal factors sufficiently into account in making forecasts on the chip giant. "Intel's problems last week weren't Intel's fault, they were the Street's fault for straight-lining the expectations" from the first quarter, he said. Intel earned $2.20 per share last quarter, and the First Call view for the second quarter was $2.16 before the company Friday warned of likely lower results. The second-quarter consensus has since been revised to $1.89.
The trader said seasonality could well be the tech story to watch this summer. "I'm a little more concerned about the seasonal factors because people have been so bullish and have been betting with their wallets," he said. "It's time for a little pause in this party. We're starting to see little cracks in the armor."