Stocks fall computer issues weaken; Dow loses 28 points despite early rally inspired by MCI deal


NEW YORK -- U.S. stocks declined for a third day yesterday, as computer makers such as Dell Computer Corp. dropped on concern that the slowing Southeast Asian economies will cut into growth and profits.

The losses in computer shares offset a rally in telephone stocks sparked by MCI Communications Corp.'s agreement to be acquired by WorldCom Inc. That accord may bring an end to a three-way takeover battle for MCI.

The Dow Jones industrial average fell 28.73 to 7,552.59, led by International Business Machines Corp. and Hewlett-Packard Co. The Dow hasn't fully recovered from a 554-point drop Oct. 27, though it is up 17 percent for the year.

Trading totaled 478 million shares on the New York Stock Exchange, about 86 percent of the recent average.

The Standard & Poor's 500 index fell 6.38 to 921.13, and the Nasdaq composite index, laden with computer-related companies, dropped 11.68 to 1,590.72.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks added 0.18 to 435.40; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, lost 44.84 to 8,917.32; the American Stock Exchange composite index slid 2.20 to 680.47; and the S&P; 400 mid-cap index slipped .35 to 219.35.

Dell dropped $2.9375 to $75.625; International Business Machines Corp. lost $1.8125 to $97.6875; and Hewlett-Packard Co. fell $1.4375 to $60.50.

MCI Communications jumped $4.625 to $41.50 after the U.S. long-distance communications company accepted WorldCom's bid of $51 a share, or $37 billion. If completed, the acquisition would be the largest ever.

WorldCom fell $2.125 to $31. Other suitors' shares gained. GTE Corp. added $1.25 to $44.875, and British Telecom PLC's American depositary receipts rose $2.50 to $79.50.

MCI was the most active stock on U.S. exchanges, with 24.4 million shares traded.

Boeing Co. gained 87.5 cents to $46.625, and International Paper Co. rose 50 cents to $47.75.

Chase Manhattan Corp. fell $3.375 to $114.0625 and Fleet Financial fell 56.25 cents to $63.50.

Intel Corp., which controls almost 90 percent of the market for the microprocessors that power personal computers, fell $2.3125 to $75.125 after the company said it had discovered a flaw in a Pentium processor.

Intel said it wasn't a problem that computer users were likely to encounter in the normal use of their machines.

Disk-drive makers fell for a second day after Read-Rite Corp. said it sees earnings for the current quarter below analyst estimates because of weak demand and "pricing pressure" on its older products.

Read-Rite's warning follows a similar statement last week from disk drive maker Western Digital Corp.

Read-Rite fell $1.6875 to $17.50; Western Digital lost $1.875 to $21.75; Quantum Corp. dropped $1.875 to $28.3125; and Seagate Technology Inc. lost $2.0625 to $24.1875.

Applied Materials Inc. fell $2.8125 to $32.375 on concern that demand for its semiconductor-making equipment will decline. Cowen & Co. analyst Tia-Min Pang cut the firm's rating on the stock to "buy" from "strong buy."

CKS Group Inc. shares plunged $22.875 to $13.375 after the marketing company said fiscal fourth-quarter earnings will be far below analysts' forecasts because sales to its largest customers were less than expected.

Laser Industries Ltd. gained $3.625 to $26.875 after ESC Medical Systems Ltd. offered to buy the company for stock valued at $31.50 a share, or a total of $270 million. ESC fell $2.8125 to $39.1875.

Centocor Inc. fell $9 to $43.125 after the company released study results for its heart drug ReoPro that weren't as good as investors had hoped.

Pub Date: 11/11/97

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