- Greek Cabinet Approves EU, IMF Bailout Bill
- We're Not Greece: Italian Prime Minister Monti
- Private Homebuilders in the US: Dead Men Walking
- Dividend Payout Could Hit Record Amount This Year
- With Investors So Bullish, Stock Pullback Must Be Ahead
- Obama Likely to Call for Cutting Top Corporate Tax Rate
- New York Fashion Week Fall 2012
- NetNet: Why Saving Greece Could Destroy the World
- My Funny Valentine: When Love and the Fed Collide
MOST POPULAR
HOT ON FACEBOOK
Rotten Apple Spoils Tech; Google, Others Plunge
Text Size 
Technology stocks plunged Wednesday, as weak earnings forecasts from Apple and Motorola sparked fears that tech companies would be hurt by a slowing U.S. economy.
 |
AP |
"The market was expecting a shot in the arm (from Apple earnings) to show that there was total resilience to the fears of slow down and they didn't get it," said Mike Abramsky, RBC Capital Markets analyst in an interview on CNBC.
The tech-heavy Nasdaq was in bear market territory for most of Wednesday as shares of Google, Microsoft [MSFT
Loading...
()
] and others sold off briskly. But a late-day rally pushed the index up about 1 percent.
Apple's [AAPL
Loading...
()
] shares posted their biggest decline since July 2001, while Motorola [MOT
Loading...
()
] led shares of telecom companies lower.
Motorola shed more than 17% on word that the struggling company's turnaround would take a little longer than it had planned. Rival Research in Motion [RIMM
Loading...
()
] didn't fare much better, with its stock
Shares of Google [GOOG
Loading...
()
], a long-time tech darling, hit a four-month low after UBS raised concerns about the Internet giant's revenue and profit margins.
Citigroup downgraded TI shares to hold from buy, citing potential weakness in its hanset supply business.
"The current market environment is unforgiving and despite a solid report and guidance from Texas Instruments, we view near-term upside as unlikely given risk to handset fundamentals," Citigroup said.
Bucking the downward trend in tech, was EBay [EBAY
Loading...
()
], which will report its earnings after the closing bell on Wednesday.
On Tuesday, the Wall Street Journal reported Chief Executive Meg Whitman was preparing to retire from the online auctioneer.
Intel [INTC
Loading...
()
], which had sold off earlier in the week, also proved resilient Wednesday.
Sour Apple Outlook
"Investors are nervous about strength in consumer and even though Mac shipments were quite strong, iPods were light versus expectations," said Shannon Cross of Cross Research.
Apple's holiday-quarter shipments were slightly disappointing, with shipments of iPod music and video players rising 5 percent from a year earlier to 22.1 million units and shy of forecasts from three analysts tracked by Reuters, which ranged from 22.4 million to 25 million.
Sales of the iPhone hit 2.3 million, in line with most Wall Street estimates.
Apple said iPod revenue rose 17 percent from a year earlier -- the strongest growth in a year, according to executives -- as the debut of a $400 model with a touch screen and wireless Internet capability lifted average selling prices.
The company also shipped 2.3 million Mac computers in the quarter, up 44 percent from a year earlier.
But that growth could slow if the U.S. economy slides into recession, said Tim Bajarin, head of Creative Strategies, a consultancy.
"Consumers right now are wary of the economy. They are really reluctant to pull the financial trigger on any purchases outside of their normal daily expenses," Bajarin said. "Unless a computer is mission-critical, consumers will most likely delay purchases."
However, some analysts say Apple may be able to weather an economic downturn better than its peers because devices like the iPod and iPhone are so desirable. Companies such as Motorola, who is struggling to come up with a follow-up to its hit Razr phone, could fare worse.
"Considering their product offerings, I don't think Apple is damaged in any way. Their products are still selling like gangbusters and even with a slowdown in consumer spending, they will see robust growth," said Ted Parrish, co-manager of the Henssler Equity Fund that holds Apple shares.
Net profit for the first quarter ended December 29 was $1.58 billion, or $1.76 per share, compared with $1 billion, or $1.14 per share, a year earlier. Revenue was $9.6 billion, up 35 percent from $7.12 billion a year earlier.
That handily topped the average Wall Street profit target of $1.61 while revenue was about $100 million above the average forecast, according to Reuters Estimates.
But the outlook fell short of expectations.
Apple, known for its conservative financial forecasts, said earnings for the second quarter would be 94 cents per share, versus the average analyst target of $1.08, and revenue of $6.8 billion, versus Wall Street's $7.0 billion target.
Apple also said it expected gross profit margin to fall to 32 percent from 34.7 percent the previous quarter, due mainly to slower software sales and lower overall revenue.
Meanwhile, Motorola reported net income of $100 million, or 4 cents a share, down from $623 million, or 25 cents a share, a year earlier.
Earnings from continuing operations were 5 cents a share, compared with 21 cents a share in the year-ago period, as sales fell 18% to $9.65 billion.
Analysts forecast, on average, earnings of 13 cents a share on $9.6 billion in revenue, according to Thomson Financial.
Looking ahead, the company expects a first-quarter loss excluding charges of 5 cents to 7 cents a share. Analysts' mean estimates were for earnings of 10 cents a share on $9 billion in revenue.
--Reuters contributed to this report.
Data is a real-time snapshot *Data is delayed at least 15 minutes
