Tech stocks lagged the broader market on Tuesday, weighed down by analyst downgrades to Broadcomand Cisco.
Broadcom fell 7%, dragging the chip sector 2.5% lower, after CS First Boston said channel checks suggest that the company’s earnings may be at risk for the next couple of quarters. CSFB lowered its 2004 and 2005 estimates for Broadcom, but maintained an “outperform” rating on the company, saying it remains one of its “favorite long-term names given its product cycle drivers, competitive barriers and operating margin leverage.”
Cisco slipped 1% on a big jump in its employee stock option program, from 141 million shares to 162 million shares, as investors were concerned about shareholder dilution and proposals calling for stock options to be expensed. UBS lowered its target on Cisco, citing the effect of the options on its stock option adjusted earnings estimates for 2005. UBS said it now sees earnings of 78 cents a share in 2005 after adjusting for stock options, down from 82 cents.
The broader market edged higher as oil prices fell for the third straight day.
The Nasdaq slipped 1 to 1836, the S&P 500 climbed fractionally to 1096, and the Dow rose 25 to 10,098. Volume rose to 1.09 billion shares on the NYSE, and 1.31 billion on the Nasdaq. Advancers led 18-14 on the NYSE, and 16-13 on the Nasdaq. Upside volume was 50% on the NYSE, and 45% on the Nasdaq. New highs-new lows were 89-17 on the NYSE, and 35-46 on the Nasdaq.
After the close, Applied Signaland Semtechbeat estimates. OmniVisionbeat but warned.
During the day, Opswareclimbed 3% on a deal with EDS.
Synapticsrose 5% on an upgrade.
8×8surged 18% on a retail deal with Fry’s Electronics.
And Googlefinally ran into profit-takers, sliding 4%.