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Techs end bloody 1Q up
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March 30, 2001: 6:57 p.m. ET
Semiconductor issues rally late but Nasdaq gains remain limited
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NEW YORK (CNNfn) - While chip issues staged a late-day rally Friday, overall weakness in the group tempered gains in the technology sector as the Nasdaq closed out its worst first quarter ever.
The Philadelphia Stock Exchange's semiconductor index, or Soxx, closed down 24.96 points at 545.04, a 4.4 percent decline in the day.
Shares of computer memory-chip maker Micron Technology (MU: Research, Estimates) were leading the way lower. Its shares fell $3.72, or 8.2 percent, to $41.53. After Thursday's close, the company reported a fiscal second-quarter loss from ongoing operations that was slightly narrower than analysts had expected.
The drop in chips was not enough to keep the Nasdaq from gaining 19.69 points, or 1.1 percent, to close at 1,840.26. At that level, the tech-heavy index fell 25.5 percent for the first quarter, the worst first-quarter showing since the index lost 12.1 percent in the same period in 1973.
Micron's upside surprise was really not much of a surprise at all. The company said last week that its memory-chip business had performed a little bit more strongly than it previously had anticipated. At the same time, the company said it is selling off its struggling PC business, which it currently operates through its Micron Electronics (MUEI: Research, Estimates) subsidiary, which posted a wide quarterly loss where the Street had expected a modest profit.
 Including the results of Micron Electronics, the company's consolidated net loss for the most recent quarter was $88.3 million, or 15 cents per share, compared with net income of $161.3 million, or 29 cents per share, a year earlier.
Micron Technology is a leading supplier of memory chips used in PCs, the market for which has been extremely sluggish in the face of a slowing U.S. economy.
Executives at Micron in Boise, Idaho, said that memory-chip prices had begun to firm in recent weeks, but some analysts were dubious about the sustainability of that trend.
"We are not discounting the fact that ordering levels appear to have picked up," Credit Suisse First Boston analyst Tim Mahon said in a note to clients Friday. "We remain skeptical, however, as to whether or not this uptick will continue and whether true sell-through to the consumer of the (dynamic random access memory) has occurred."
Mahon slightly reduced his revenue estimates for Micron's current quarter and the remainder of the fiscal year. At the same time, he said he expects the company's loss to narrow slightly, owing to a better margin structure and a greater percentage of its revenue coming from the semiconductor operations. He reiterated a "hold" rating on Micron's shares.
Joe Osha at Merrill Lynch was a little more bullish. He reiterated a "buy" rating on Micron Friday.
"Total inventory on the balance sheet increased $115 million from last quarter to total $1.14 billion -- a little higher than expected," Osha said.
"Nevertheless, Micron confirmed that it was past its peak inventory levels, seen five weeks ago," he added. "With supply growth decreasing, we believe that Micron stands to benefit almost immediately from an environment of firming prices."
Elsewhere in the chip segment, shares of Cirrus Logic (CRUS: Research, Estimates), which makes analog and digital signal processor, or DSP, chips, fell 63 cents to $14.94, a 4.0 percent decline.
The company warned early Friday that its profit during the next two quarters will fall short of previous estimates, citing a buildup of inventory in its distribution channel and a shift in demand for its less profitable products.
At the same time, shares of Genesis Microchip (GNSS: Research, Estimates), which specializes in chips used to manipulate and process digital video and graphic images, added 63 cents to $9.94, a 6.7 percent gain. Genesis said late Thursday that it expects its fiscal fourth-quarter results to fall well below its prior expectations.
Blaming restructuring costs related to layoffs and other expenses related to initiatives that were terminated due to weaker market conditions, Genesis executives said they now expect a loss of between 15 cents and 17 cents per share. The Street had expected the company to log a profit of 11 cents per share, according to a survey conducted by earnings tracker First Call. The company said it expects to return to profitability in the fiscal first quarter.
The stocks of companies that make the equipment used to manufacture chips also were falling.
 Shares of Applied Materials (AMAT: Research, Estimates), the No. 1 chip-equipment maker, fell $2.06, or 4.5 percent, to $43.50. Shares of Teradyne (TER: Research, Estimates) were down $1.39 at $33, a 4.0 percent decline. Novellus Systems (NVLS: Research, Estimates) shares fell $2.94 to $40.56.
Most of the tech segment indexes were pressured as well.
Among computer hardware makers, shares of Compaq (CPQ: Research, Estimates) fell 87 cents to $18.20. Dell Computer (DELL: Research, Estimates) shares were down $1.25 at $25.69. Shares of Gateway (GTW: Research, Estimates) were trading 1 cent higher at $16.81. Hewlett-Packard (HWP: Research, Estimates) shares added 63 cents to $31.27.
The Goldman Sachs computer hardware index finished down 0.97 points at 291.31, a 0.3 percent decline.
Among networking equipment makers, shares of shares of Cisco Systems (CSCO: Research, Estimates) added 56 cents to $15.81. Juniper Networks (JNPR: Research, Estimates) fell $1.44 to $37.96. Nortel Networks (NT: Research, Estimates) shares rose 55 cents to $14.05. Lucent Technologies (LU: Research, Estimates) shares traded 59 cents higher at $9.97.
The American Stock Exchange's networking index was 6.31 points higher at 411.26, a 1.6 percent gain.
Meanwhile, computer software and Internet stocks were struggling to stay out of negative territory.
In software, shares of market leader Microsoft (MSFT: Research, Estimates) were down 69 cents at $54.69, a 1.2 percent decline. At the same time, shares of Oracle (ORCL: Research, Estimates), the No. 2 software supplier, were up 46 cents, or 3.1 percent, at $14.98.
The Goldman Sachs computer software index ended 4.63 points higher at 177.96.
Among dot.coms, shares of online retailing leader Amazon.com (AMZN: Research, Estimates) added 23 cents to $10.23. Internet media company Yahoo! (YHOO: Research, Estimates) jumped 75 cents to $15.75. Shares of Web advertising firm DoubleClick (DCLK: Research, Estimates) traded $1 higher at $11.56. Internet auctioneer eBay (EBAY: Research, Estimates) gained $2.06 to $36.19.
The Goldman Sachs Internet index rallied 5.12 points, or 4.8 percent, to 110.96. 
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