By Rex Crum
SAN FRANCISCO (MarketWatch) -- Tech stocks put in a roundly
disappointing performance Tuesday, led by losses from Apple Inc.
and IBM Corp., and the sector also felt some impact from a broad
market retreat spurred on by losses reported by one of the nation's
banking giants.
Apple (AAPL) cut its losses, but still closed they day down by
$8.51 a share, or 2.7%, at $309.49 after reporting late Monday a
fiscal fourth-quarter profit of $4.31 billion, or $4.64 a share, on
revenue of $20.34 billion. During the same period a year ago, Apple
earned $2.53 billion, or $2.77 a share, on $12.2 billion in
sales.
The results exceeded the consensus estimates of analysts
surveyed by FactSet Research. However, Apple said its gross profit
margins fell to 36.9% from 41.8% in the year-ago period, and its
iPad sales of 4.2 million units was shy of what many analysts had
estimated.
"[Apple's] margins are clearly in a down trend, but should get
some help from component costs and iPhones next quarter," said
Kevin Hunt, of Hapaolim Securities, in a research note. Hunt holds
a buy rating and $325-a-share price target on Apple's stock.
IBM (IBM) also took a hit as its shares fell $4.80, or 3.7%, to
$138.03. Late Monday, IBM posted a third-quarter profit that rose
12% from a year ago, and also raised its earnings outlook for all
of 2010 to "at least" $11.40 a share. However, IBM said signings of
new services contracts fell 7% from a year ago to $11 billion
during the quarter.
VMware Inc. (VMW) shares fell $5.23, or 6.7%, to $73.12 a day
after the virtualization software company reported strong quarterly
results, but analysts began to question its growth prospects going
forward.
Yahoo Inc. (YHOO) ended the day off by 44 cents a share, or
almost 3%, at $15.49 in advance of the Internet company's quarterly
report, due after the market close.
Optical networking stocks were bruised following an earnings and
sales warning late Monday from Infinera Corp. (INFN) .
Infinera said it expects to earn 2 cents to 5 cents a share on
sales in a range of $115 million to $120 million. However, analysts
surveyed by Thomson Reuters had earlier forecast Infinera to earn
11 cents a share on $132.5 million.
That forecast sent Infinera's shares down $4.38, or 35.5%, to
close at $7.95. Other optical networkers were punished as well,
with Ciena Corp. (CIEND) shares falling almost 7%, Finisar Corp.
(FNSR) giving up 11.6%, JDS Uniphase Corp. (JDSUD) ending the day
with a loss of 6% and Alcatel-Lucent (ALU) down by 5%.
Other losses came from Microsoft Corp. (MSFT), Oracle Corp.
(ORCL), Hewlett-Packard Co. (HPQ), Google Inc. (GOOG) and Cisco
Systems Inc. (CSCO).
EMC Corp. (EMC) posted one of the few gains, and even that was
miniscule. The data-storage technology company's shares rose 3
cents to close at $20.83 following its quarterly results, which
came out before the market opened. The data-storage technology
company reported a 58% increase in its quarterly earnings.
The Nasdaq Composite Index (RIXF) fell more than 43 points, or
1.8%, to close at 2,436, while the Philadelphia Semiconductor Index
(SOX) fell 1.4% and the Morgan Stanley High Tech 35 Index (MSH)
shed 1.6%.
The sector also felt some of the broad-market losses brought on
by reaction to Bank of America Corp. (BAC) reporting wider net loss
from the year-ago period. The banking giant said that for its third
quarter it lost $7.3 billion.