By Benjamin Pimentel
The tech sector sank Wednesday afternoon, weighed down by shares
of Yahoo Inc., which plunged more than 10% on news of a
long-discussed search deal with Microsoft Corp.
Yahoo (YHOO) fell 11.5% to about $15.23 after the two tech
bellwethers unveiled a 10-year search agreement following a bitter
battle over Microsoft's failed bid to buy the Web portal 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 up-front payment is vastly different from $47 billion in
the bank."
Microsoft (MSFT) was up a fraction, surviving a sector-wide
sell-off that pulled the Nasdaq Composite Index (RIXF) down by 0.8%
to 1,959. The tech-heavy index is down a fraction for the week.
The Microsoft-Yahoo deal was widely perceived as a threat to
Google Inc. (GOOG), whose shares were down about 1%.
But Kay also said: "I wouldn't be quaking in my boots if I were
Google," adding that the Microsoft-Yahoo 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 1.5%,
with major chip makers falling, including Advanced Micro Devices
Inc. (AMD), Intel Corp. (INTC) and SanDisk Corp. (SNDK)
Other major tech names were also in the red, including Cisco
Systems Inc. (CSCO), Dell Inc. (DELL) and eBay Inc. (EBAY)
Shares of disk-drive maker Western Digital Corp. (WDC) were down
2.4% at $30.06 after the company reported its own results for the
fourth fiscal quarter. Net earnings slipped nearly 9% for the
period.