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Friday, March 19, 2010

TECH STOCKS: Tech Sector Slips As Palm Shares Plunge

By Benjamin Pimentel

Dow Jones Newswires

Most technology stocks edged lower Friday, as shares of Palm Inc. plunged after the handheld-device maker issued a weaker-than-expected revenue forecast.

Palm (PALM) fell 29.2% to close at $4, after the company also reported that smartphone sales fell short of expectations.

"We are less confident in the company's prospects as an ongoing concern," wrote Kaufman Bros. analyst Shaw Wu, one of two analysts who downgraded the company's stock to a sell rating on Friday.

"We see three scenarios," Wu added. "Company gets sold but could be a take-under; company needs to raise more capital; or company runs out of money."

Palm's decline set the tone for the sector retreat, as the Nasdaq Composite Index (RIXF) edged lower by 0.7% to 2,374. However, the tech benchmark eked a 0.3% weekly gain.

The Morgan Stanley High Tech 35 Index (MSH) was down 0.9%, while the Philadelphia Semiconductor Index (SOX) lost 1.65%.

In the chip sector, shares of Xilinx Inc. (XLNX) and Altera Corp. (ALTR) took a hit after a J.P. Morgan note said cuts in capital spending at China Mobile could be a "negative data point."

Shares of Advanced Micro Devices (AMD) and Altera were each down nearly 3%. Xilinx and Texas Instruments (TXN) were each down more than 1%.

Other major tech players were in the red, including Apple Inc. (AAPL), Dell Inc. (DELL) and Google Inc. (GOOG).

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