Tech stocks ended their weeklong rally, tumbling with the rest of the market, a day after voters elected Barack Obama as president to help navigate the country through an economic crisis. The Nasdaq fell 98 points, or 5.5%, to close at 1682. Yahoo! ( YHOO) shares climbed 4.3% to $13.93 on speculation that Microsoft ( MSFT) would make a new offer to take over the company. Yahoo! on Wednesday acknowledged that Google ( GOOG) had pulled out of a search deal that was expected to generate $250 million to $450 million in operating cash flow, and potentially $800 million in annual revenue. That has left investors wondering if Microsoft is now in a better position to acquire Yahoo!. The two companies had walked away from negotiations in June. Shares of Microsoft fell 6.2% to close at $22.07. Time Warner Cable ( TWC) saw its shares tumble 3.2% to $19.90 after it lowered its full-year outlook . The company posted better-than-expect third quarter earnings but cut its 2008 guidance to $1.10 a share to $1.15 a share. Analysts had been expecting earnings of $1.13 a share. Time Warner anticipates an 8% rise in full-year revenue, but that's down from its earlier projection for a 9% growth. SunPower's ( SPWRA) shares plummeted 35% to $32.84 after the company said that a stronger U.S. dollar will reduce fourth quarter and fiscal 2009 earnings growth . The company now expects fourth-quarter revenue of $388 million to $418 million, and earnings of 58 cents to 65 cents a share, excluding items. That's below Wall Street estimates for earnings of 75 cents a share in the fourth quarter. For 2009, SunPower expects total revenue of $2 billion to $2.1 billion and earnings of at least $3 a share.
Microchip Technology ( MCHP) shares fell 8.5% to $23.12 after Goldman Sachs downgraded the stock to sell from neutral as a result of a slowdown in the company's core growth and the impact of increased competition. The firm cut Microchip's price target to $21 from $26. VMware ( VMW) shares also declined on Wednesday, by 10% to $27.51. Merrill Lynch downgraded the stock to neutral from buy, but raised its price target to $31 from $26. Shares of IAC/InterActive Corp ( IACI) were up 3.3% to $17.14 after beating Wall Street's third-quarter estimates. Without one-time events and expenses related to its spinoffs, IAC would have earned 25 cents per share, well above analysts' expectations of 16 cents per share. Third-quarter revenue rose 10% to $369.3 million, topping estimates for $355.4 million.