NEWS AND COMMENTARY
October 30, 2000
Nasdaq Swoons on Cisco News
By Kristen French, The Street.com
Another Bellwether Cracks ... Weiss comments
NEW YORK - Following Lehman Brothers' slashing of the 12-month price target on networking giant Cisco to $60-$65 from $90, tech stocks kicked off on the downside this morning.
The tech heavy Nasdaq Composite Index was off 51 to 3227.2, and the S&P; 500, a good gauge of the broad market, was moving up 8.6 to 1388.2.
Cisco, the most actively traded stock on the Nasdaq, was off 4.1% to $48.63, and its blues were spreading to the rest of the optical, networking and storage stocks this morning.
Cisco reported in early August that its fiscal fourth-quarter profits topped analyst expectations, strengthened by strong sales to Internet service providers, cable and telephone companies. But the opticals and networking group has been under fire since last week, when Nortel Networks warned of weakness in optical sales for the year. Tech stocks in general have gotten whacked this quarter as a slew of third-quarter earnings disappointments have investors worried that price-to-earnings valuations in the sector remain too high.
Nortel was lately 5% lower, Juniper Networks was off 4.8% to $172.75, Ciena was falling 7.3% to $97, and SDL was 8.6% lower to $231.06.
Intel (chips), IBM (PCs), Nortel (optics), Lucent (telecom & optics), Amgen (biotechs), Motorola (wireless & chips), AT&T; (telecom), Priceline (dot-com). What do all of these companies have in common?
All are technology bellwethers that have been pounded into the dirt. All were once darlings of their respective tech sectors, now Wall Street is sending these companies' stock prices tumbling because of dismal earnings and warnings of future disappointments. Not one technology sector has escaped unscathed.
This morning, it was networker Cisco Systems' turn to send the Nasdaq into a nosedive. But that still doesn't mean that the Nasdaq has bottomed out. It is ready and willing to punish any stock that steps out of line. And the bad news just keeps on coming.
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