US markets are braced for a fall in high technology stocks when trading resumes today following the bruising profits warning issued late on Friday by Compaq, the world's largest personal computer maker.
Compaq, which employs more than 2,000 people in Ireland in its Compaq and Digital operations, delivered its warning that first-quarter earnings would be 15 cents per share, less than half the 31 cents expected by Wall Street just after the close of normal trading on Friday.
Compaq, blaming lower than anticipated demand and competitive pricing in the personal computer sector, said it expected to report revenues for the quarter of $9.4 billion (€8.7 billion).
In after-hours dealing, its shares fell by 16 per cent to $26, and other prominent technology stocks, including Dell, Intel and Microsoft, were caught up in the shift in investor sentiment.
Analysts predicted that the Nasdaq composite index, which is dominated by technology companies, would be knocked off the record high it reached on Friday.
The Dow Jones Industrial Average, whose components include International Business Machines (IBM) and Hewlett-Packard, is also likely to be affected.
They were divided, however, about how much longer-term damage Compaq's warning would do to broader investor sentiment in the US and internationally.
Personal computer sales have been largely responsible for the rise in technology stocks, which have in turn supported the record-breaking performance of the three major US stock market indices.
Mr Ashok Kumar, technology analyst at Piper Jaffray, said: "In the short term, there is a lot of concern and a lot of scepticism. You will see some trading down in sympathy, but I think sanity will prevail when Intel reports."
Intel, the world's largest semiconductor manufacturer, is expected to report tomorrow that its first-quarter earnings rose from 81 cents a share to $1.10. The group is seen as a better bellwether than Compaq, where "a lot of the problems are company-specific", Mr Kumar said.
