Technology shares continued their headlong plunge yesterday after poorly-received results from Hewlett-Packard led to a renewed bout of selling. The HP figures came shortly after figures from Dell Computer reinforced the view that the sector was set for a significant slowdown in sales and earnings.
Stock prices fell across the board on most international markets, partly due to the uncertainty over the outcome of the US presidential election. But most of the selling pressure was felt by technology and Internet stocks. HP's weaker-than-expected results exacerbated worries that the days of super-charged growth in the PC industry may be ending.
"One company misses and you take everything down in its wake," said Mr Larry Wachtel, market analyst at Prudential Securities. "The PC market, the cellphone market, the dot.com market, the fibre optic market - everything is slowing down."
European markets had been sharply weaker ahead of the opening of the New York markets, following the release of the HP figures. And the markets remained weak and nervous after Nasdaq immediately fell more than 5 per cent - below 2,900 - taking the losses from last March's high to 40 per cent and the fall since the beginning of the year to 28 per cent. A late reversal, which saw the Nasdaq composite index rebound into positive territory before moving back into the red in the final minutes of trading - it closed at 2,966.74, down 62.25 - came too late to boost European sentiment.
Dealers believe that while a resolution of the presidential election impasse might restore some confidence in the so-called "old economy" stocks, there is little likelihood of an end to volatility for the technology sector which is suffering from a severe crisis of confidence with deep worries among investors over the earnings outlook.
Fund managers said the uncertain outlook for technology stocks would mean that some firms planning initial public offerings might have to rethink their plans, or else scale back their price expectations.
In Europe, blue-chip telecoms equipment makers were among stocks hardest hit in the general tech sector sell-off. France's Alcatel fell more than 6 per cent, UK telecoms equipment maker Marconi nearly 8 per cent, while Finnish mobile handset maker Nokia was down 5.5 per cent.
Vodafone - whose €5 billion (£6.35 billion) takeover of Eircell is expected to be confirmed within the next week - was slightly weaker ahead of results today.
The heaviest losses on European markets were suffered in Frankfurt where the Neuer Markt for technology stocks plummeted more than 9.5 per cent, its largest intra-day percentage fall. Trin tech, with a dual listing on the Neuer Market and Nasdaq, fell as low as €9.51 before eventually closing 39 cents lower on the day on €10.30. This compares, however, with a flotation price of €11 in September last year and a high for the stock earlier this year of €79.50.
In London, where the Tech mark index fell 4.5 per cent, Baltimore Technologies fell another 39p to £4.20 sterling (€7.02) and is now in serious danger of losing its FTSE 100 listing next month for the second time if its share price does not improve significantly.
Parthus, which hit a high of £4.20 recently, lost another 11p to £1.69 leaving investors who subscribed to the recent share issue at £2.10 nursing early losses.
Datalex, which floated on the Dublin market at the end of October at €6.84 a share, fell heavily on the Dublin market and closed 54 cents lower on €6.30. Datalex, Parthus and Baltimore continued to fall in Nasdaq trading, but the Irish stocks to suffer the most from the negative sentiment on Nasdaq were Iona and SmartForce which were both down more than 8 per cent in New York's morning session.
