Tech shares plunge on Intel downgrade; stock's recent sharp rise is cited by two analysts, sparking profit-taking

Article Abstract:

Prudential Securities and Gruntal & Co analysts downgraded Intel's stock, causing a sharp decline in technology stocks on Feb 5, 1997, as investors reacted to the news. The Nasdaq Composite Index, which contains many technology stocks, dropped to 1348.44, down 25.31 points. Intel's own stock fell $7.50 to close at $157.25. The analysts say their move was prompted by the rapid increase in Intel share prices, which rose from $130.375 on Jan 2, 1997, to $164.75 on Jan 4, 1997. Both analysts believe the stock was trading higher than it was fundamentally worth. Gruntal's analyst expressed some doubt about semiconductor sales, citing a bill-to-book ratio of 0.99 for the three month period ending Dec 1996, and claiming that the bill-to-book had not reached a similar December low since 1988. Other analysts are more optimistic about the industry, pointing out that Intel continues to experience strong demand and that the company's average selling prices are increasing in 1st qtr 1997.

Intel Corp., INTC, Market Trend/Market Analysis

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Bloody price wars and strategic errors hammer high tech; markets drop after 2 shocks, although many factors are probably temporary; furious efforts to dominate

Article Abstract:

Intense price competition and declining demand in technology markets results in a drop in technology stock prices. On Jul 11, 1996, the Nasdaq Composite Index dropped 3.05 percent, one of the greatest drops in history. The Dow Jones Industrial Average declined 1.48 percent on the same day. The negative activity resulted from startling announcements of losses by Motorola and HP, two of the industry's giants. The industry's problems are partly related to temporary factors, including slowing demand for microcomputers and cellular phones as well as an annual mid-year slowdown. Some companies have made mistakes in attempting to keep up with their quickly changing markets, including paying too much for acquisitions. Investors are also concerned that increasing competition in declining markets will minimize profit-making opportunities.

Computers, High technology industry, Computer industry, Industry trend

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Technology's hot streak rekindles debate over the sector's pattern of boom and bust

Article Abstract:

Technology stocks have performed well since the start of 1995, fueled by strong consumer sales of PCs during the holiday season, but the performance has reignited discussion about whether technology companies have broken out of a boom-bust cycle. Companies typically see two boom years followed by a bust in technology spending and in technology stocks. Motorola's report that its net income for the 4th qtr rose 51% is an example, as technology stocks rose to finish high on the news. The traditional boom-bust argument would predict the market is heading for a low after a long period of sustained growth. Experts are speculating on whether the sharp growth posted in the 4th qtr will continue through 1995. Motorola expects earnings in the semiconductor industry to grow by 20% in 1995.

Computers & Auxiliary Equip, Finance, Technology, Motorola Inc., MOT, Market Analysis, Stock, Financial Report, Market Trend Market Analysis

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