SAN FRANCISCO -- Talk about a one-two punch. Chipmakers were pummeled today by a downgrade of
and more negative news from the PC makers.
Declines in both boxmakers and chips were enough to keep the Nasdaq in negative territory. Losses came despite a recovery in the bond market, which was blamed for weakness the past few sessions.
Micron Technology closed 8 13/16 lower, a drop of 13%, at 58 after
took the stock off its recommended list and rated it as market outperform. According to
, Goldman analyst Joe Moore cited valuation concerns and potential weakness in Micron's chip market for the downgrade.
Other chip makers suffered too.
closed down 7 13/16, or 6%, at 119 15/16.
was off 7 1/16, or 7.3%, at 89 3/16.
was the lone bright spot among the chip makers, benefiting from a report from
that the AMD-K6 desktop PC processors outsold all Intel-based desktop PCs in the U.S. retail market for the first time in January. It closed at 18 1/8, flat.
The chain reaction sent equipment manufacturers lower as well.
closed down 5 1/16, or 8.9%, at 51 13/16 and
closed down 8 1/8, or 13%, at 55 5/8.
closed 6 points lower, or 9.2%, at 59 1/16.
Adding to the pessimism on chipmakers were negative comments on the boxmakers, most notably
, which closed down 5 5/8, or 14%, at 35 3/8. The company was downgraded to neutral from buy by
due to weakness in sales during the first six weeks of the quarter. Both
Credit Suisse First Boston
earnings estimates on the company.
Michael Kwatinetz, analyst with CS First Boston, said the nature of the business suggests that whenever there are forecasts of shortfalls in the PC industry, the reaction in the market will be great, though in this case it may be over-exaggerated.
While January may not have been as good a month for the boxmakers, Kwatinetz said he visited
today and the company suggested it will have a solid March quarter, which could mean that things picked up in the entire industry in February.
"It's not an Armageddon," he said of the outlook for the quarter.
PC makers did suffer today.
closed 1 5/8 lower at 80 1/8, while
closed 7 7/16 lower, or 9%, at 72 11/16.
closed 4 3/4 lower, or 6.7%, at 66 7/16. IBM closed 3 7/8 lower at 169 3/4.