By Benjamin Pimentel
The tech sector sank early Wednesday weighed down by shares of
Yahoo Inc. which plunged more than 9% on news of a much-awaited
search deal with Microsoft Corp.
Yahoo (YHOO) fell 9.2% to about $15.64 in the opening minutes of
trading after the two tech giants unveiled a 10-year search
agreement, after a bitter battle over Microsoft's failed bid to buy
the Internet giant for roughly $47 billion.
"Big victory for Microsoft, which gets what it wanted for no
up-front payment," analyst Roger Kay of Endpoint Technologies
Associates said. "The earlier deal would have been much better for
Yahoo. No upfront payment is vastly different from $47 billion in
the bank."
Microsoft (MSFT) was up a fraction in early trading, surviving a
sector-wide sell-off that pulled the Nasdaq Composite Index (RIXF)
down by 0.3% to 1,970.
The Microsoft-Yahoo deal was widely perceived as a threat to
Google Inc. (GOOG) whose shares were down about 1%.
But Kay also added, "I wouldn't be quaking in my boots if I were
Google," adding that the so-called Micro-hoo alliance "has a long
way to go to prove it can take even a single point of share from
Google."
The tech sector also took a hit from declines in semiconductor
shares as the Philadelphia Semiconductor Index (SOX) lost 0.8%, as
major chip makers fell, including Advanced Micro Devices Inc.
(AMD), Texas Instruments (TXN) and SanDisk Corp. (SNDK).
Other major tech bellwethers were also in the red, including
Dell Inc. (DELL), eBay Inc. (EBAY), Amazon.com (AMZN) and Cisco
Systems (CSCO).