Alibaba Drops on Validity of Orders, Micron Falls on Downgrade: Tech Winners & Losers
NEW YORK (TheStreet) -- Alibaba (BABA) - Get Report fell Tuesday after questions arose about the validity of its orders and also actions taken by the Taiwanese government to kick the e-commerce giant out of its country in the next six months. Micron Technology (MU) - Get Report tanked on an analyst downgrade while Applied Materials (AMAT) - Get Report tumbled as an institutional investor cut its stake.
Alibaba fell 2.9% to close at $81.58, touching on a new low.
The shares took a hit after the Taiwanese government accused Alibaba of violating its investment rules by registering through a Singapore-based holding company, in a move to allegedly hide its Chinese ownership. Taiwan heavily regulates China-based companies, according to a Reuters report, because the two regions have been at odds for years. China considers Taiwan a rogue province while Taiwan considers itself an independent country and the true China.
In a statement, Alibaba CEO Jack Ma described the situation as a result of the company's "lack of sufficient communication" and that it understands the requests the Taiwan government is making, according to the report. Alibaba has 300,000 customers in Taiwan, which it has built up since opening its operations there in 2008.
Alibaba also reportedly faced widespread brushing at its Web sites, according to the Wall Street Journal. Brushing, in essence, is the placement of placing "fake" orders on a Web site to boost its sales volume and prominence in listings. The vendors typically reimburse customers for the cost of placing the "fake" orders and then ship either empty or worthless products in the boxes.
Micron Technology tanked 5.1% to end the session at $29.66.
The DRAM chip maker plunged after Nomura analyst Romit Shah downgraded the company to neutral from buy, according to a report in Benzinga.
In issuing the downgrade, Shah also lowered the price target to $30 from $40, as well as cut his 2015 earnings estimates to $3.35 a share from $3.65 and the 2016 estimate to $4 from $4.86.
The analyst described Micron as lagging in technology transitions and that it is "undershipping demand in DRAM," according to Benzinga.
Applied Materials plunged 4.5% to close at $24.49.
The technology provider for the semiconductor, flat panel and solar industry plummeted after institutional investor Glenview Capital Management reduced its stake in the company to approximately 4.5 million shares, or 0.57% of the fund's total portfolio. That reduction in the fourth quarter was fairly substantial, given that in the third quarter Glenview held roughly 10 million shares, representing about 1.1% of its overall portfolio.
When Applied announced its first-quarter results, it also issued a lower-than-expected second-quarter forecast. Investors looking to dive in deeper can check out the transcript from Applied Materials' earnings call.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
