By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Big declines from NetApp Inc.
highlighted a swath of losses across the tech sector Thursday,
sending nearly every major tech stock into the red and putting even
more pressure on Hewlett-Packard Co. and its upcoming quarterly
earnings report.
The losses helped drag down the Nasdaq Composite Index (RIXF) by
131 points, or 5.2%, to close at 2,380. The Philadelphia
Semiconductor Index (SOX) and the Morgan Stanley High Tech 35 Index
(MSH) each gave up about 6% on the day.
NetApp (NTAP) shares fell by $5.85, or 14%, to $35.80 after the
data-storage technology company gave a disappointing quarterly
report and outlook.
Brent Bracelin, who covers NetApp for Pacific Crest Securities,
said that NetApp's warning just emphasizing a sense of negativity
emerging over the data-storage and hardware sectors.
"Cautious commentary from Brocade, Dell and NetApp in the last
week tied to unexpected slowdowns in July, which have extended into
August, suggests fundamentals within IT hardware are eroding faster
than we expected," Bracelin said, in a research note.
Late Wednesday, NetApp reported a fiscal first-quarter profit of
$139.5 million, or 34 cents a share, compared with a profit of
$150.7 million, or 40 cents a share, for the same period a year
ago. Revenue rose to $1.46 billion from last year's sales of $1.15
billion.
Excluding one-time items, NetApp would have earned 55 cents a
share, which met the forecast of analysts surveyed by FactSet
Research, who also pegged NetApp's quarterly revenue at $1.5
billion.
Steve Gomo, NetApp's outgoing chief financial officer, said the
company saw a "dramatic slowdown" in sales during July.
NetApp also gave a second-quarter forecast that fell short of
analysts' estimates.
With NetApp in the lead, other data-storage company's shares
also retreated.
NetApp's biggest rival, EMC Corp. (EMC), shed $1.92 a share, or
8.5%, to close at $20.59, hard disk-drive makers Seagate Technology
(STX) fell 9.5% and Western Digital Corp. (WDC) was off by more
than 7%.
Additionally, Brocade Communications Systems Inc. (BRCD) gave up
11%, JDS Uniphase Corp. (JDSUD) fell by 12.7%, Riverbed Technology
Inc. (RVBD) shed more than 15% and electronics contract
manufacturer Jabil Circuit Inc. (JBL) saw its shares fall by almost
12%.
Hewlett-Packard Co. (HPQ) fell $1.88 a share, or 6%, $29.51. The
company confirmed it would acquire British software giant Autonomy
Corp. for $42.11 a share. The deal represents a 64% premium over
Autonomy's Wednesday closing share price.
Dell Inc. (DELL) gave up 44 cents a share, or 3% to fall to
$13.76 after shedding 10% on Wednesday on reaction to the PC
company cutting its full-year forecast.