By Dan Gallagher
Tech stocks managed to post mild gains Friday morning despite a
small selloff in the semiconductor sector, as National
Semiconductor Corp. and Texas Instruments Inc. both declined after
issuing updated guidance for their current fiscal quarters.
Other big tech players went south on broker downgrades,
including Cisco Systems, Dell Inc. and Adobe Systems.
Nat Semi (NSM) shares fell more than 7% to $11.90 by midday. The
chip maker reported a strong increase in first-quarter profit, but
issued a forecast for the current period that fell short of Wall
Street's estimates.
In a statement, Chief Executive Officer Don Macleod said,
"Slower growth in our end markets and distribution channel, along
with some likely inventory reduction, will mute the seasonal growth
that we would normally see in our business during this time of the
year."
Texas Instruments (TXN) was off nearly 1% to $23.64. Late
Thursday, the company tightened the range of its earnings and sales
forecast.
The Philadelphia Semiconductor Index (SOX) lost more than 2% by
midday, while the Nasdaq Composite Index (RIXF) was flat and the
Morgan Stanley High Tech 35 Index (MSH) was down 0.7%.
Dell (DELL) slid by 3.5% to $11.95 after the PC maker was
downgraded to an underweight rating by Morgan Stanley. Analyst
Kathryn Huberty said the move was based on her lower estimates for
the PC sector.
"We see potential earnings and valuation multiple pressure for
Dell over the next 12-months, due to: 1) slowing PC unit growth
resulting from tablet cannibalization and desktop virtualization;
2) tougher enterprise server year-over-year revenue growth compares
and increasing low-end competition; and 3) less developed Mobile
Internet and Cloud Computing platforms than peers," Huberty wrote
in her report.
Another Morgan Stanley analyst -- Adam Holt -- downgraded Adobe
(ADBE) to an equal weight, or neutral, rating, citing reduced PC
sales forecast and what he described as high expectations for the
company's flagship CS5 product.
"We are not changing estimates, but our lower multiple reflects
more limited upside potential and the fact that we're now
mid-product cycle when multiples typically compress," Holt
wrote.
Cisco (CSCO) shares fell by 1.1% to $20.39 after being moved
from Top Pick status by RBC Capital Markets. Analyst Mark Sue wrote
that "uncertainty related to enterprise network upgrades and the
lack of conviction from carrier customers may limit near-term stock
appreciation."
Top gainers included Oracle Corp. (ORCL), IBM (IBM) and
Amazon.com (AMZN). Hewlett-Packard Co. (HPQ) was down 1.4%.
Microsoft Corp. (MSFT) shares slipped 0.7%. Stephen Elop -- who
heads Microsoft's business division -- resigned to take the CEO
post at cell-phone giant Nokia Corp. (NOK).