By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) -- Hewlett-Packard Co. shares
tumbled Thursday -- setting up for the stock's worst one-day
performance in two years -- while the rest of the tech sector
managed solid gains, thanks to jumps at Microsoft, Yahoo and the
videogame sector.
But the session got an unexpected jolt when trading of
Nasdaq-listed stocks and options were halted due to a technical
glitch.
H-P's (HPQ) slump came a day after a disappointing earnings
report that highlighted doubts about Chief Executive Meg Whitman's
turnaround strategy. The stock was last down more than 12% to
$22.26, the worst performer on the Dow Jones Industrial Average
which was up more than 50 points. It was the worst one-day plunge
for the stock since Aug. 19 of 2011, according to FactSet.
The previous afternoon, H-P posted mostly in-line results for
the third fiscal quarter, but Whitman stunned Wall Street when she
said total company year-over-year revenue growth in the next fiscal
year is "unlikely."
Whitman said H-P's enterprise group's performance was "very
disappointing," a notable comment given the company's bid to
strengthen its position in corporate IT. Among new changes to the
business, H-P said Dave Donatelli, who had led the enterprise
division, has been re-assigned to a new role and replaced by Bill
Veghte.
The report quickly sparked a debate on whether Whitman's
multi-year turnaround strategy was working.
Citigroup analyst Jim Suva reiterated a buy rating, saying H-P's
"turnaround story" was "intact," even as he pointed to "some bumps
on the road."
Other analysts were not as upbeat.
Needham's Richard Kugele kept his buy rating, noting how
"investors were willing to give the company benefit of the doubt on
its restructuring progress years ahead of a revenue recovery."
"We believe that euphoria is finally wearing off," Kugele wrote.
"The top leadership changes in the two largest divisions suggest a
company still searching for the right formula to restart growth,
rather than one well on its way to doing so."
But other major tech issues were in positive territory.
Shares of Microsoft (MSFT) were up 2.2%, the top gainer on the
Dow. Nomura Securities raised its rating to buy from neutral based
on "anticipated benefits of shareholder activism."
Yahoo Inc. (YHOO) also saw its shares jump 3% after comScore
reported that the Web portal's traffic beat that for Google Inc.
(GOOG) for the first time since 2011. Google was up a fraction.
GameStop (GME) shares were also up 11% after the videogagme
publisher put out a stronger-than-expected forecast. That helped
lift the stocks of videogame publishers such as Electronic Arts
(EA) , Activision Blizzard (ATVI) and Take-Two Interactive (TTWO)
.
The Nasdaq Composite Index (RIXF) was up 1% at 3,631. The Morgan
Stanley High Tech 35 Index (MSH) was up 0.2%, while the
Philadelphia Semiconductor Index (SOX) was ahead 1%.
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