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CNNfn tech stock report
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January 14, 1999: 5:26 p.m. ET
Earnings prospects, analyst downgrades drag tech shares lower
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NEW YORK (CNNfn) - Technology stocks took a downward turn Thursday with analysts downgrades taking their toll on Internet, chip and computer shares.
Internet shares continued their downward spiral. Analysts say the sector moves on momentum rather than underlying fundamentals, and that investors can expect more volatility during the quarter.
"These stocks are for speculators more than investors," Lise Buyer, analyst at Credit Suisse First Boston, told CNNfn. "The average individual should be very careful that the money they are putting into these stocks is money they can afford to lose. This should be play money."
Among Internet stocks on the losing side Thursday were Broadcast.com Inc. (BCST), which plunged 16-1/8 to 153-7/8, and DoubleClick Inc. (DCLK), which lost 8-11/16 to 84-1/2.
Internet portal shares tumbled after Deutsche Bank Securities analyst Alan Braverman cut his ratings on Yahoo! Inc. (YHOO), Excite Inc. (XCIT) and Lycos Inc. (LCOS).
Yahoo! shares fell 23-15/16 to 344-1/16; Excite lost 4-1/4 to 65-1/8; and Lycos tumbled 11-3/16 to 85-3/4. Infoseek Corp. (SEEK) shares fell in sympathy, finishing 2-5/8 lower at 73.
Xoom.com Inc. (XMCM), however, added 9-13/16 to 47-15/16 after the company signed a sponsorship deal with three Internet companies, including online auctioneer eBay Inc. (EBAY). eBay shares closed 9-13/16 higher at 225-5/16.
Inktomi Corp. (INKT) finished 1-5/8 higher at 158-1/2 as investors anticipated Internet software company's first-quarter earnings report. After the closing bell, Inktomi reported a loss of $6.4 million, or 24 cents a share, well ahead of Wall Street forecasts of a loss of 29 cents a share. Inktomi shares climbed to 161 in after-hours trade.
Advanced Micro Devices Inc. (AMD) stumbled 5-3/8 to 22-3/8 after the chipmaker reported fourth-quarter earnings below analysts estimates as a result of production problems and lower chip prices. BT Alex.Brown and NationsBanc Montgomery Securities lowered their ratings from "buy" to "market perform" and "hold," respectively.
Other chip shares falling lower included Intel Corp. (INTC), which shed 5-1/4 to close at 133-3/4; chip-equipment maker Applied Materials Inc. (AMAT), which tumbled 1-5/8 to 53-1/4; and Linear Technology Corp. (LLTC), which fell 1-3/4 to 98-1/16.
Computer maker Apple Computer Inc. (AAPL) lost 5-1/8 to 41-3/8 despite reporting better-than-expected first quarter earnings after Wednesday's market close. Though Apple received a rating upgrade from Donaldson, Lufkin & Jenrette and an earnings-per-share upgrade from Standard & Poor's, investors reacted to Salomon Smith Barney's downgrade of the stock to "neutral" from "buy."
Elsewhere in the computer sector, IBM Corp. (IBM) fell 5-3/16 to 180-5/16, while Gateway Inc. (GTW) lost 2-11/16 to 54-5/16.
Finally, mobile telecommunications giant Motorola Inc. (MOT) finished 4-3/8 lower at 66-1/2 despite reporting fourth-quarter earnings that exceeded Wall Street forecasts. In a conference call early Thursday, Motorola officials warned that the company does not expect to reach 15 percent revenue growth during fiscal 1999. 
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