The day opened with bad news and it just got worse.
Before the markets opened, CPU manufacturer AMD
said revenue for the current quarter will be in a range of $620 million to $700 million, significantly down from earlier estimates of $820 million to $900 million. “As we have seen in previous statements from a number of other companies, there is broad weakness in the personal computer market and it is adversely affecting AMD,” said Robert J. Rivet, AMD’s chief financial officer.
Soon after, Salomon Smith Barney lowered its investment rating to “neutral” from “market perform” and UBS Warburg dropped its rating from “buy” to “hold.” The stock closed at $8.70, down 15.7 percent for the day.
Hours later, makers of memory chips were hit by news that the U.S. Department of Justice (DOJ) is investigating the possibility that DRAM chips were dumped to manipulate prices. Micron
and South Korean manufacturer Samsung both received subpoenas asking for documents related to pricing of the memory chips which are used heavily in all types of computers. Micron shed 15 percent to close at $20.08.
Separately, the U.S. Federal Trade Commission (FTC) filed a complaint alleging that Rambus Inc.
had manipulated prices on a different type of memory, synchronous dynamic RAM or SDRAM, a technology that the company has pioneered.
The FTC charges that Rambus, which relies on SDRAM technology licenses for 75 percent of its revenue, manipulated prices by sponsoring an industry-standards group without informing other members that it was seeking to patent the SDRAM technologies that the group was advancing. Rambus dropped 36 percent to $4.12 on very heavy volume.
The broad markets didn’t fare well either, as yet another Mideast terrorist occurred in Jerusalem while the markets were open. The Nasdaq slipped below 1500 to close at 1496, down 3 percent. The DJIA shed 144 to close at 9562.
Even stocks with positive news couldn’t overcome the gloomy mood. Oracle
opened well with a five percent gain in the morning but ended down $.18 or two percent to close at $8.80. In results that were announced after yesterday’s close, the company slightly beat analysts expectations. And today, analysts largely welcomed the company’s forecasts for the next quarter and year which indicate continued profitability on revenues that will remain lower than 2002 levels.
Lehman Brothers analyst Neil Herman lowered his quarterly estimate for the database maker to 7 cents a share from 9 cents and reduced the revenue estimate to $2.05 billion from $2.07 billion. For the year, he cut his earnings estimate to 37 cents a share from 41 cents and raised his revenue view to $9.49 billion from $9.27 billion.
Reflecting a mood of pessimism that refuses to lift, Herman wrote, “Given the continued tough environment and cautious outlook, we are lowering our numbers on Oracle but believe shares are attractive.”