By Rex Crum
Losses from Google Inc. and Advanced Micro Devices Inc. hit the
tech sector early Friday and never lost their grip, sending nearly
every major tech stock to finish off the week in the red.
The Nasdaq Composite Index (RIXF) fell more than 34 points to
close at 2,481, while the Philadelphia Semiconductor Index (SOX)
fell 1.3% and the Morgan Stanley High Tech 35 Index (MSH) gave up
1.6%.
Adding to the broad-market's woes were losses from
financial-services giant Goldman Sachs Group Inc. (GS). Goldman's
shares fell as much as 15% after the U.S. Securities and Exchange
Commission charged the brokerage with defrauding its investors
regarding products related to subprime mortgages.
Google (GOOG) fell more than $45 a share, or 7.6%, to $550.14,
largely in reaction to the company's plans to spend more
aggressively on growing its business. It was the biggest single-day
percentage loss for Google since Dec. 1, 2008.
"I think Intel set the bar high [for earnings], but Google
brought it back down," said Romeo Dator, co-manager of the U.S.
Global Investors All-American Equity Fund (GBTFX). "However, I do
expect more earnings beats and very good guidance through this
quarter from tech companies.
Late Thursday, Google reported a first-quarter profit of $1.96
billion, or $6.06 a share, up from $1.42 billion, or $4.49 a share,
in the same period a year ago. Net revenue, which is sales minus
Google's revenue-sharing payments to partners, rose 23% to $5.06
billion.
But Google's total costs and expenses rose to $4.3 billion, from
$3.6 billion a year ago, as the company hired almost 800 new
employees, the most in a quarter in two years, and said it has no
plans to slow down spending in order to maintain its lead in the
search market and expand into new business areas.
James Mitchell, an analyst with Goldman Sachs, said the decline
in Google's stock was due to "too-much-information syndrome, with
investors seizing on any debatably-negative data points."
Mitchell, who has a buy rating on Google's stock, raised his
price target on Google to $680 a share from $670.
AMD (AMD) trimmed its losses, but was also bruised to the tune
of 35 cents a share, or 3.4%, to close at $9.81.
Despite AMD turning in a first-quarter profit of $257 million,
or 35 cents a share, on $1.57 billion, AMD shares tumbled as some
analysts said more was expected from the semiconductor company.
Some concerns were also raised about how well AMD is doing in the
markets for low-end notebook PCs and corporate servers, and that it
could be losing market share to Intel Corp. (INTC)
Nearly every other major semiconductor stock followed AMD into
the red, with losses from Intel, Micron Technology Inc. (MU), Texas
Instruments Inc. (TXN), Broadcom Corp. (BRCM) and Nvidia Corp.
(NVDA) shares.
Oracle Corp. (ORCL) gave up its early gains to fall 25 cents a
share to $25.95. Before the market opened, Oracle said it would
acquire Phase Forward Inc. (PFWD), a maker of drug data-management
software, for $685 million. The deal values Phase Forward at $17 a
share, or a 30% premium over its Thursday closing price of $13.08 a
share.
Losses also came from Dell Inc. (DELL), Apple Inc. (AAPL),
Hewlett-Packard Co.(HPQ) and Cisco Systems Inc. (CSCO).