Who'll Stop the Rain?

Mar 01 2001

A parade of bad news from America's high-tech companies drove both stock exchanges lower Thursday. The announcements came on the heels of Fed Chief Alan Greenspan's testimony before Congress on Wednesday, in which he disappointed many investors who wanted him to indicate an early interest-rate cut.

At 12:18 p.m. EST Thursday, the tech-heavy Nasdaq was down 2.16 percent, or 46.42 points, at 2105.41. At 12:20 p.m., the Dow was down 1.55 percent, or 162.8 points, to 10332.48. By 12:29 p.m., the Standard 100, as powered by Epoch Partners, was down 4.31 percent, or 19.83 points, at 440.31.

On Wednesday, U.S. markets ended the trading day lower after Fed chief Alan Greenspan indicated in congressional testimony that the central bank was unlikely to cut interest rates before its next meeting on March 20. Disheartening news from several tech companies late Wednesday and early Thursday only stoked investor negativity.

Network equipment maker 3Com announced after the close of trading Wednesday that it would lose more than twice as much in the current quarter as it previously expected, as a result of the slowdown in the U.S. telecom market and in the overall economy. The company had previously said it would report a pro forma operating loss, excluding charges, of between $80 million and $100 million. Now the company expects that figure to come in at between $235 million and $245 million. 3Com had lost 20.89 percent, or $1.91, to $7.22 by 12:09 p.m.

Personal computer seller Gateway said it will break even in the first quarter, rather than earn the 17 cents per share that analysts expected. Gateway will take charges of between $150 million and $275 million in the first quarter of 2001, including the $50 million charge for job cuts and other items that it had announced earlier. The company will also restate its 2000 earnings. Gateway had lost 8.26 percent, or $1.42, to $15.78 by 12:06 p.m.

Fiber optics maker Corning said on Thursday that it would lay off 825 employees. Like 3Com, Corning blamed a slowdown in telecom demand. The layoffs will hit a plant that produces photonics products, which are used to send telecom signals across fiber-optic lines. In mid-February, Corning had lowered its forecast for photonics revenue growth. Corning gained 4.88 percent, or $1.32, at $28.36 at 12:07 p.m.

Long-distance company WorldCom on laid off 6,000 employees on Wednesday. As of 10:22 a.m. EST, WorldCom was down 5.64 percent, or 94 cents, to $15.69.