Europe Lets Bears out on Wall Street

The bears growled throughout the tech sector this week on Wall Street.

Over the past two weeks, a number of high profile tech vendors blamed stagnant sales in Europe for their reappraisal of formerly optimistic earnings forecasts. While the profit warnings affected shares last week, they truly took hold this week. The tech-laden Nasdaq dropped sharply at the week's start, managed to hold even in mid-week trading, but succumbed to earnings pressure once again throughout Thursday and Friday.

The Nasdaq sloughed off another 3 percent by Friday's close with investors scampering to find shares immune from the tech fallout. While many companies still showed signs of impressive revenue and continued growth, the market punished vendors for anything less than the spectacular forecasts from previous quarters.

Nextel Communications Inc. (NXTL) enjoyed a modest recovery Friday after dropping more than 10 percent during the previous day's trading. ING Barings upgraded Nextel Friday from Buy to a Strong Buy rating, helping the communications service provider edge slightly higher. Nextel closed up $0.69 per share to $39.12 or a gain of around 2 percent.

On Thursday, Nextel said it gained 540,000 subscribers in the third quarter. Analysts, however, seemed less than impressed with the figure as many expected the company to gain close to 575,000 subscribers in the period. Nextel shed $4.50 per share Thursday on the news.

Dell Computer Corp.'s stock (DELL) also struggled to rise Friday after experiencing one of the worst weeks in the PC vendor's history. While the Round Rock, Texas-based company has long stood as one of the best-performing stocks of all time, lethargic performance in the PC market sent shares of Dell to their lowest point in over a year. The company issued a profit warning Wednesday, causing the stock to sink over 10 percent in after-hours trading. [See "Oracle and Dell Deal with Stock Slide," Oct. 4] Thursday's trading proved marginally better; however, on Friday, Dell gained around half a percent point to close up at $25.31.

Dell, Intel Corp., and others blamed weak sales in Europe as one of the main reasons for recent difficulties. The problems affecting Dell and Intel hurt Nasdaq's performance. The PC behemoths scared investors, although the vendors maintain they will manage to post impressive revenue.

Razorfish Inc. (RAZF) also blamed Europe for lowering expectations for its third quarter earnings. The Internet consulting company said it will post between 4 cents to 7 cents per share, instead of the 8 cents per share expected by analysts polled by First Call/ Thomson Financial. The company still expects around $77 million to $78 million in revenue for the quarter. Razorfish closed at a 52-week low Friday, losing more than 40 percent on the day. It finished trading down $3.75 to $5 per share. At one point this year, the vendor's stock stood at $56.

Priceline.com Inc. (PCLN) could not blame the continent across the pond for its woes. Its stock, which traded as high as $150 per share after its IPO, sank to the lowest point in its recent history Friday. The name-your-own-price Internet company lost over 33 percent of its value Thursday after releasing word that WebHouse Club -- the gas and grocery division of the site -- would close its doors. On Friday, shares of Priceline went down another 14 percent at one point and then recovered to close at $5.56 per share.

Software-maker Hyperion Solutions Corp. (HYSL) tumbled nearly 40 percent Friday after claiming that poor sales would yield earnings below expectations. In March, the company soared to a high of $65 per share. Friday, however, it closed at $12.00, down nearly 8 points on the day.

Nextel, based in Reston, Virginia, can be reached at +-703-433-4000 or http://www.nextel.com/. Dell, based in Round Rock, Texas, can be reached at +1-512-338-4400 or via the Internet at http://www.dell.com/. Razorfish, headquartered in New York, can be contacted at +1-212-966-5960, or at http://www.razorfish.com/. Hyperion, based in Sunnyvale, California, can be reached at +1-408-744-9500 or http://www.hyperion.com/. Priceline.com, in Norwalk, Connecticut, can be contacted at http://www.priceline.com/.

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