Why the Dow Tech Stocks Are Tanking
The Dow Jones Industrial Average (INDEX: ^DJI) is showing a nice gain at the midpoint of the trading today. As of 12:30 p.m. EDT, the Dow sits at 13,583, up more than 88 points, or 0.66%.
The market received positive job numbers from yesterday's ADP report. Today's Department of Labor report, which showed that 367,000 new jobless claims had been reported last week, can also be seen as a positive move for the economy. The previous week was adjusted up by 4,000 but still came to just 363,000 new claims. These numbers are both still below the 385,000 claims made during the week of Sept. 15 and well below the 402,000 claims during this reporting week last year. Tomorrow, the Department of Labor will release September's jobs report, which analysts believe will show 115,000 new jobs for the month.
So why are they down?
Today's Dow technology slide can be attributed to Hewlett-Packard's CEOs, both past and present. At a securities analyst conference yesterday, current HP CEO Meg Whitman didn't tell investors what they wanted to hear, but what they needed hear. Over the past few years, a number of individuals held the CEO title at HP, and The Wall Street Journal quoted Whitman blaming current problems on a number of "operational miscues" and "inconsistent strategic choices." Hewlett-Packard saw it shares drop 2.72% earlier after yesterday's 13% slide, though they're currently near breakeven for the day.
Another member of HP's management team also told analysts that revenue will fall next year in each business except software. This statement has made waves with other technology firms, such as Microsoft and Intel, which are trading lower by 0.22% and 0.35%, respectively. Both firms need to see PC sales perform well. Microsoft's Windows 8, which will soon be released, needs PC refreshes to help drive sales, and Intel has already blamed lackluster PC demand for its sliding sales. The chip maker has an 80% market share in PCs -- a position which brings in an immense amount of revenue for the company.
Furthermore, IBM can also blame its share price slide on Whitman's company. Like HP, IBM relies on revenue from the sales of servers and mainframe computers to large business clients; a slowdown there is not good for either company. Further, IBM is also in the software business -- an area where HP is growing and focusing its long-term efforts. While HP really doesn't pose a threat to IBM right now, it could become a larger player in that sector.
Over the past year, Hewlett-Packard has struggled and seen its stock hammered by investors and is down more than 44% year to date. Every company faces a number of opportunities and risks, and HP has squandered some opportunities and now faces an endless number of risks. To find out what the future holds for a more promising prospect, Intel, Click here for an in-depth premium report that comes standard with a year of updates.
The article Why the Dow Tech Stocks Are Tanking originally appeared on Fool.com.Matt Thalman owns shares of Microsoft. The Motley Fool owns shares of International Business Machines, Intel, and Microsoft. Motley Fool newsletter services recommend Intel. 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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