Shares in Dell and Hewlett-Packard fell sharply last night after both companies said they saw price wars and little relief in sight from slack U.S. demand.
The warnings were the latest in a string of bad news from the computer industry, which has been hit by a slump in worldwide demand as economic uncertainty shrinks corporate and consumer spending.
Hewlett-Packard closed down $3.22, or nearly 9 per cent, at $33.13 on the New York Stock Exchange, where it was the 12th most active issue. The stock was near the 12-month low of $29.13 after topping $70 last March.
Shares of other computer makers also fell, with the world's biggest PC maker Compaq ending off $2.10, or nearly 9 per cent, at $21.80, and Gateway closing down $1.40, or about 7 per cent, at $19.55. Both stocks are traded on the NYSE. Apple fell 5.3 per cent to close down $1-1/16 at $19 on the Nasdaq.
One analyst downgraded Hewlett-Packard, and many companies revised earnings forecasts down to reflect the glum outlook.
"We reduced our fiscal year 2001 estimates and our fiscal year 2002 estimates reflecting the tough industry demand conditions, execution issues in its high-end server business, and continued aggressive pricing conditions," Bear Stearns analyst Mr Andy Neff wrote in a report on Hewlett-Packard.
Dell has said it will eliminate 1,700 full-time staff from its worldwide work force of 40,200.
Companies in the sector have already revised their earnings forecasts down several times in recent quarters, but analysts say the industry's trouble now lies in predicting when and how the market will recover for personal computers.
Reuters