A high-profile announcement from
failed to lift tech stocks, which gave back early gains as
woes pushed the sector solidly lower.
didn't help matters, slipping 3 11/16, or 12%, to 27, on rumors the modem maker would warn of weak sales and earnings for its third quarter. After the market closed, the Santa Clara, Calif., communications concern did indeed forecast third-quarter earnings of 23 cents a share, 13 cents shy of the
view, on revenue of about $1.4 billion. 3Com attributed the weak quarter to "seasonal softness" and a slowdown in U.S. and Latin American enterprise markets.
Tech stocks did an about-face late in the day, with the sector mostly lower. A huge selloff in
seemed to spark the selloff. The late decline came despite gains made in Hewlett-Packard after it announced it was
splitting into two companies.
H-P closed 2 3/4 higher at 68 5/8, but was far off its highs of 73 1/2, made soon after it began trading.
Intel was under pressure throughout the day following another
downgrade of the stock, this time from
NationsBanc Montgomery Securities
. But selling accelerated in Intel with about an hour and a half to go and the rest of the sector followed. Intel closed 7 1/4 lower or 6.2% at 109 13/16, just off the session low of 109 1/2.
Jim Herrick, managing director of trading with
Robert W. Baird
, said the troubles with
(which warned late Monday of a potential shortfall in earnings) became "intertwined" with the rest of the sector.
"We just lost momentum," said Herrick. "The sellers overpowered the buyers and we got the selloff."
A number of Net stocks saw swift turnarounds that erased earlier gains.
, which traded as high as 135 3/4, closed down 11 11/16 points or 8.8% at 121 5/16.
, which traded as high as 141, dropped 7 15/16, or 6.1%, to close at 122 3/4.
closed down 5 3/8 or 5.6% at 90 1/8 after trading as high as 101 1/2, and
closed down 5 7/8 or 3.4% at 169 after earlier trading to 181 1/2.
BEA Squelches H-P Rumors
CEO William Coleman squelched talk that
would acquire the middleware company.
"I think it's very flattering that people think H-P might be interested, but we have no interest in being acquired right now," Coleman told
in a phone interview after press reports said H-P and BEA had held discussions. "We'd be foolish to enter into an acquisition now when our stock is relatively low, and we're at an inflection point when our business is about to boom. Any price we would agree to would be several times what anyone would want to purchase us at now."
However, Coleman did not deny that discussions took place. "There are always high-level discussions going on that may or may not mean anything," he said, noting that in the past few months he had fielded numerous "feel out calls."
Man Bites Dog
Snowbird, UTAH -- In a startling break from usual events at the
Hambrecht & Quist planet.wall.street
conference in Snowbird, Utah, some actual news occurred. Coming as it does on the tail of so many other investor conferences, the H&Q gathering often has "news" that isn't so new. But
announcement this morning of a 2-for-1 split, got people's attention.
In post-split-announcement trading -- as post-split-announcement trading will go -- the stock went bonkers. @Home closed up 8 7/16 or around 8% at 115 9/16.
And then @Home CFO Ken Goldman went on to actually announce news! Goldman released a plan to introduce new, high-speed Internet access on television sets. The offering, says Goldman, will be priced at about $15 a month and will be delivered through a new set-top box that @Home will offer as early as this summer.
"We expect that TV will be a major new revenue opportunity," says Goldman. In 1998, @Home had $48 million in revenues, but with the addition of TV and the completion of @Home's merger with
, Goldman says he expects revenue by the year 2002 to be two billion dollars.
Another important driver of revenues would be the fledgling "@Work" service, Goldman said. Goldman said @Work would grow to be 10% to 20% of revenues in three years -- or at least $200 million.
It was also clear from Goldman's comments that the current @Work structure wasn't enough. "We will probably be looking at opportunities to expand our @Work business model," said Goldman. In other words, the company may be dipping into its $420 million in cash to do some mergers.
And which mergers would that be? "I suppose you want me to tell you who and at what price," Goldman told
. "But I think that'd make your job too easy."
-- Cory Johnson
Staff reporter David Shabelman contributed to this article.