Dow is off as HP profit falls short of forecasts Company's earnings cost industrial average 2nd straight record day; Wall Street


NEW YORK -- U.S. stocks fell yesterday for the first time this week after Hewlett-Packard Co. warned that earnings fell short of expectations last quarter.

HP's slump overshadowed a gain in Microsoft Corp., which came after the world's biggest software company said it's in talks with the government to avert an antitrust lawsuit.

The Dow Jones industrial average fell 39.61 to 9,172.23. If it weren't for Hewlett-Packard's $11.3125 slide to $70.3125, the Dow would have set a second consecutive record. Hewlett-Packard warned late Wednesday that its fiscal second-quarter earnings would miss expectations because of price cuts on its personal computers.

In an early sign that stocks may have a bad day again today, National Semiconductor Corp. warned after the market closed that it will report a larger-than-expected loss in its fourth quarter ending May 31, hurt by slower sales of its chips to personal computer makers. The warning is likely to hurt semiconductor and computer shares. National Semiconductor fell $1.9375 to $18.875 yesterday.

Dell dropped $3 to $95.25; Compaq fell 31.25 cents to $31.5625; and Yahoo! Inc. fell $3.75 to $120.25.

The Standard & Poor's 500 index fell 1.49 to 1,117.37 and the Nasdaq composite index, packed with computer stocks, dropped 0.82 to 1,865.36.

Among other broad market indexes, the Russell 2,000 index of small capitalization stocks fell 1.93 to 475.55; the Wilshire 5,000 index lost 5.22 to 10,617.25; the American Stock Exchange composite index slipped 1.61 to 741.38; and the S&P; 400 midcap index slid 0.69 to 372.06.

The Bloomberg Maryland index, which tracks the top 100 stocks in Maryland by market valuation, lost 1.16 to 238.67.

More than four stocks fell for every three that rose on the New York Stock Exchange, where about 578 million shares changed hands, down from the 600 million shares that traded Wednesday on the Big Board.

International Business Machines Corp. weathered yesterday's drop in computer stocks. Louis Gerstner, chief executive of the Armonk, N.Y.-based company, said he expects revenue growth to accelerate and will cut costs further to boot profit. IBM rose $3.9375 to $125.8125.

Computer networking company Cisco Systems Inc. rose 6.25 cents to $76.0625.

Microsoft rose $2 to $88.9375. Last-minute negotiations between the company and government antitrust officials sparked optimism that Microsoft will be able to proceed with the release of its new flagship product, Windows 98. The company's current operating system runs about 90 percent of the world's new PCs.

Philip Morris Cos. fell 93.75 to $36.25, a 52-week low. Investors are concerned that potentially costly lawsuits and federal regulations will continue to hound cigarette makers.

C-Phone Corp. rose for a second day, gaining 62.5 cents to $10.375. Almost 29 million shares changed hands, making C-Phone the most active stock in U.S. markets. The money-losing video-conferencing company announced plans to introduce a television set-top box that lets users access the Internet on their TVs.

Seagram Co. fell 37.5 cents to $42.6875. The Canadian beverage and entertainment company is in talks with Royal Philips Electronics NV to buy PolyGram NV, the world's largest recorded-music company, for an estimated $10 billion.

Travelers Group Inc. fell 87.5 cents to $60.75. Chairman Sanford Weill approached Fidelity Investments Chairman Edward C. Johnson on a possible acquisition of the world's largest mutual fund company, the New York Post reported. A spokesman for Fidelity denied that Weill and Johnson held merger discussions.

PHP Healthcare Corp. dropped 93.75 cents to $12.875 after Geoffrey Harris at Salomon Smith Barney Inc. cut the firm's recommendation on the managed health-care company to "neutral" from "buy."

Pub Date: 5/15/98

Copyright © 2020, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad