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Adam Eisner, theWHIR.com
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July 6, 2001 — The Nasdaq posted some pretty significant losses Thursday and Friday thanks to a late-week rush of warnings from the tech sector and some poor economic data released Friday.
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American markets closed early Tuesday because of the Fourth of July holiday, and were closed all day Wednesday.
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The tech-heavy index lost more than 3.5 percent today, and toyed with slipping below the 2,000 mark for most of the day before finally closing at 2004.18. The loss, which represented about 75 points, capped off two surprisingly weak sessions.
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The losses were precipitated by a series of warnings Thursday and Friday, including one from data storage firm EMC, who warned their quarterly earnings would be well below expectations. Chipmaker Advanced Micro Devices also cut their outlook Friday, bringing virtually the entire tech sector down with them.
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The warnings spooked investors, who began to express concern that a rebound from the recent market downturn might be further off than once expected.
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“EMC was a core holding, a must-own stock,” Frank Gretz, a market analyst with brokerage Shields & Co, told Reuters. “It’s one more piece of bad news that suggests a give up on the year-end recovery scenario.”
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Global communications firm WorldCom Inc. also reduced its cash-earnings outlook for 2001 this week – however, the news wasn’t that bad.
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The company made some accounting changes related to the restructuring of its ownership interest in Brazilian carrier Embratel, WorldCom said
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WorldCom said it would not combine Embratel’s financial results with its own as previously planned. The company has a 19 percent stake in Embratel, Brazil’s largest long-distance telephone company.
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The restructuring of ownership, coupled with WorldCom’s May 2001 debt issuance and the impact of acquiring communications and hosting firm Intermedia/Digex, prompted the company to adjust its guidance.
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Markets also didn’t get much help this week from economic data: a report released Friday said the U.S. jobless rate had increased for the third month in a row. 114,000 Americans lost non-farm jobs last month. This helped drag major markets down as well.
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Speaking of markets, here was an interesting piece of data released Friday regarding market share: according to analyst firm IDC, Tivoli Systems, an IBM company, holds the majority share of the systems management software market in the Asia Pacific region. Tivoli leads the multi-billion dollar market in the key areas of systems management, storage management, network management and performance management.
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On the Web hosting front, Verizon turned a few heads Friday when it was revealed that the company had unveiled a new policy to its Internet subscribers aimed at reducing spam. The new policy prevents users from sending emails from different domains. This has been met by complaints from several of Verizon’s customers, who doubt that the policy will be at all helpful, and see it merely as a nuisance.
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Of Verizon’s 950,000 dial-up and digital-subscriber-line customers, about 50,000 use a different domain name from the four that the company provides. This includes users who check mail from multiple accounts and use Verizon’s SMTP servers for outgoing mail. Under the new policy, all such emails will be rejected, in an attempt to reduce spamming.
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Over in the U.K., Application service provider FutureLink Corp. confirmed this week that it is actively investigating the sale of its U.K. operations.
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FutureLink acquired the U.K. operations in November of 1999, when it bought the server-based computing and connectivity solutions distributor KNS Distribution Limited, and launched its ASP business as FutureLink Europe Ltd.
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The company said in a statement released earlier this week that it has received non-binding indications of interest from potential buyers.
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American markets may have closed early Tuesday, but that didn’t stop a major announcement from Canadian telecom TELUS: the company announced the launch of two new state of the art Internet data centers in Toronto and Calgary.
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The economy north of the border hasn’t been having as tough a time as its American counterpart lately, and investors in the Great White North are quite pleased about that. With the recent sharp downturn of markets and less-than-promising market data released as of late, however, perhaps the entire continent will be experiencing difficulty sooner than later.
