SAN FRANCISCO (04/04/2000) - Microsoft Corp. started it. Today's Nasdaq carnage, that is. The tech behemoth slid nearly 15 percent today, down $15.38 to $90.88, taking the Nasdaq down with it. The index fell a whopping 349 points, or nearly 8 percent, to close at 4223.74.
Market divergence was at a peak today, however, as the Dow went 300 points in the other direction, closing at 11221.93, up almost 3 percent. As the government pondered how strong Microsoft should be, Microsoft showed once again just how strong it is. Indeed, nearly the entire tech market spiraled downward on Microsoft's heels, following weekend news that the company had failed to reach a settlement in its antitrust case.
Microsoft stock had closed at an optimistic $106.25 on Friday, amid hopes that a settlement might be reached. But upon hearing that negotiations had collapsed, investors fled the stock in droves, making it this morning's most actively traded Nasdaq share. Investors seemed to be bracing themselves for the final verdict, which Judge Thomas Penfield Jackson issued this afternoon.
Analysts, for their part, generally wavered today between rating the stock a "hold" or a "buy." Most felt the company remained solid and was not destined for a breakup. Investors did not reflect this analyst confidence, however.
Following last week's end-of-quarter profit-taking, the techs were down, and badly so.
From eBay, which dropped $32.75 to $143.25, to Vignette, down $37.22 to $123.03; from CMGI, down $13.31 to $100, to DoubleClick, down $13.63 to $80, the losses were cross-sector and deep. Yahoo lost $11.25 to $160.13, while Qualcomm shed $8.56 to $140.75. Other big losers were Priceline.com, which fell $14.63 to $65.38, and JDS Uniphase, which dropped $8.94 to $111.63. Sun Microsystems lost a slightly smaller amount, down $3.89 to $89.81, while Cisco was down $4.38 to close at $72.31.
How will these companies be affected by the Microsoft verdict? They won't, necessarily. "The market was looking for an excuse to drop," says Aram Fuchs, CEO of Fertilemind.net, an equity research company that analyzes offerings in the Internet sector. "The fact that the government and Microsoft couldn't reach a decision is the perfect excuse.
Internet companies that are not going to be affected by the outcome are still getting killed, because the market is just looking for an excuse." But the non-tech stocks in the Dow - remember those? - could not have cared less.
Following last week's gains, and in what some believe could be a return to value stocks, Coca-Cola was up $2.94 to $49.88, and Wal-Mart was up $4.69 to $61.19.
Philip Morris went up $2.13 to $22.88 and Merck gained $4.63 to $66.75. General Electric gained $3.31 to close at $158.94, and Exxon-Mobil was up $2.50 to $80.50. AT&T was up $1.69 to $58, and even IBM joined the Dow upswing, gaining $2.63 to 121. Indeed, if any companies held the Dow back today, it was Microsoft and Intel; the chipmaker lost $1.31 to close at $130.63. Also gaining today was the financial services sector: JP Morgan was up $10 to $141.75; American Express rose $6.56 to $155.50, and Citigroup was up $2.06 to $61.94.
Interestingly, companies making products and programs using the rival Linux program saw their stock prices hold steady today. Red Hat was down only 25 cents to $42.13, while Corel was up 13 cents to $42.13. VA Linux closed up $1.94 at $62.31.