Tech Stocks Decline After Poor Earnings
As earnings season continues to roll on, the technology industry is beginning to look weaker than most had previously expected, and a few of the Dow Jones Industrial Average's big players are pulling the index lower today. As of 2:45 p.m. EDT, the blue chip average is down 15 points, or 0.1%. The other major indexes, the S&P 500 and the Nasdaq are mixed, as the S&P 500 is higher by 0.04%, but the technology-heavy Nasdaq is lower by 0.75%.
The main cause for the big moves today is earnings reports. Microsoft's results for the second quarter of the year came in much lower than what analysts were expecting, as big softy missed on both the top and bottom lines by a good bit. Weak Windows sales, due to poor PC demand and a $900-million writedown on the company's Surface tablet, played the biggest roles in the poor quarterly results. Shares of Microsoft are down 12.22% today, as investors react to the earnings release and a number of downgrades from analysts since the report was released.
Shares of Intel are also moving lower today, as they are currently down 1.54%. The company has already released its own quarterly results and while they weren't great, they also were not as bad as Microsoft's; but that's not why shares are falling today. Intel's competitor Advanced Micro Devices reported earnings last night and, similar to Microsoft, disappointed investors in a major way. Currently, AMD is down 14.89%, and that downward pressure from a fellow chip competitor, and the poor picture Microsoft's earnings framed around the PC industry, is causing investors to flee Intel today.
Lastly, the once PC king of the world, Hewlett-Packard , has lost 3.99% today as it seems the whole PC industry is under attack. Despite the company being in the middle of a massive turnaround, which, up to this point, has gone really well, investors may be losing faith that Meg Whitman and her team can fully right the ship before weak PC sales sinks the boat.
But, despite the big declines we are seeing today, shares of all three of the Dow components mentioned above are higher in 2013. Hewlett-Packard is performing the best, as shares are up 78.11% year to date, which is crushing the Dow's 18.58% gain in 2013, while Microsoft is up 16.74%, and Intel is higher by 11.15%.
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Fool contributor Matt Thalman owns shares of Microsoft. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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