Investors Sell Off Tech Stocks

Investors, concerned about the rich valuations of many issues, dumped computer-related shares of all stripes Tuesday, in the technology sector's biggest sell-off in 10 weeks.

Not surprisingly, the Internet group was singled out for the worst punishment as losses piled up in the stocks for the sixth time in seven days.

The technology-heavy Nasdaq Composite index was tarred for a 94.06-point loss, or 3.9 percent, to 2,310.86. It was the worst percentage setback since the 4.9 percent drubbing of Oct. 5 and the third-biggest point decline ever.

Among the Nasdaq's biggest guns, Microsoft surrendered 5 3/16 to 160 1/16, Intel 6 11/16 to 125 5/16, Dell Computer 6 1/4 to 97 13/16, Cisco Systems 6 to 95 15/16, and MCI WorldCom 2 5/16 to 76 3/4.

The Dow Jones Industrial Average wilted 158.08 points, or 1.7 percent, to 9,133.03. It was the yardstick's fourth consecutive losing session.

But few analysts appeared overly nervous.

"We've been in a very normal correction after the very sharp run-up we had in late December and early January, particularly in the high-techs and Internets," said Alfred E. Goldman, director of technical market analysis at A.G. Edwards & Sons Inc.

"It's still a pause-to-refresh in a bull market," he said. "The overall action of the market going up is still a bull, albeit selective and choppy. And going down, it gives ground begrudgingly."

In the biggest deal of the day, Lycos (LCOS) said it will tie the knot with Ticketmaster Online-City Search (TMCS), a company controlled by USA Networks (USAI). The combined entity will have revenue of $1.5 billion.

But shares of Lycos fell 33 to 94 1/4 after investors objected to the tiny price premium that the deal offers shareholders. Too, the stock had run up about 80 percent over the past four weeks in anticipation of some sort of combination. Shares of Ticketmaster sank 15 1/2 to 42 1/4, while USA stock added 3 11/16 to 41 5/8.

Network Solutions (NSOL) was roughed up for a 26 1/8-point loss to 148. Investors believe the exclusive provider of Internet domain registration services faces competition after a government-sanctioned committee offered guidelines to enable other companies to enter the field. Separately, Network announced a secondary offering of about 4.6 million shares.

Elsewhere in cyberspace, Yahoo! subtracted 17 7/8 to 140 3/4, CMGI eased 14 3/4 to 94 1/4, eBay retreated 18 1/8 to 212 7/8, uBid surrendered 8 1/4 to 60 3/4, and Amazon.com dipped 9 1/8 to 100.

A handful of recession-resistent consumer stocks mustered gains. Many of the issues have underperformed the market for the past few months. Hershey climbed 1 7/8 to 57 7/16, Coca-Cola 7/16 to 61 15/16, and Clorox 3 1/8 to 123.

In Tuesday's market indicators:

• The Standard & Poor's 500 Index fell 2.2 percent.
• New York Stock Exchange losers clipped winners by more than 2 to 1.
• On the Big Board floor, turnover came to 712 million shares, jut 4 million more than that of Monday.
• Declining issues edged out gainers by more than 9 to 4 in the Nasdaq Stock Market. Volume totaled 902 million shares.
• The Russell 2000 Index of small-company stocks sank 2.0 percent.
• In the bond market, the 30-year Treasury rose 17/32, to yield 5.307 percent.

• Motorola (MOT) lost 2 1/4 to 66 1/16 after Merrill Lynch lifted its near-term rating to "accumulate" from "neutral." Merrill maintained its long-term "buy" opinion.
• PC Connection (PCCC) tacked on 1 9/16 to 19 1/16. The direct marketer of personal computers posted fourth-quarter operating net of 32 cents a share, 3 cents richer than the consensus forecast of most analysts according to a survey by earnings compiler First Call Corp. Sales grew 32 percent from the same quarter of 1997.
• K-Swiss (KSWS) rose 7 7/8 to 42 1/2 after the athletic footwear maker blew away Street estimates with its fourth-quarter earnings of 65 cents a share. A First Call Corp. poll of analysts had called for 54 cents. In addition, the company set a two-for-one stock split and Goldman Sachs raised its rating of the shares to "trading buy" from "market outperform."
• British news agency Reuters Group Plc (RTRSY) declined 4 3/4 to 80 5/8 after checking in with 1998 profit of $2.66 a U.S.-listed share, 14 cents leaner than the Street consensus according to First Call Corp. In 1997, Reuters earned $2.39.
• Caterpillar (CAT) pulled back 3/16 to 47 1/16 and Parker Hannifin (PH) gained 1 13/16 to 36 following upgrades from Morgan Stanley Dean Witter's Steve Volkmann to "outperform" from "neutral." The analyst likes the stocks in light of the improving U.S. economy.
• Duane Reade (DRD) chugged ahead 1 7/8 to 33 1/4. The New York drugstore chain operator netted 56 cents a share in the fourth quarter vs a 5-cent loss in the year-ago period. That bested Wall Street's consensus forecast by 4 cents according to First Call Corp. Sales jumped 62 percent.
• Cox Radio (CXR) connected for a 3 7/16-point gain to 46 1/4. Fourth-quarter profits came in at 24 cents a share, a nickel above the year-ago figure and the same as Wall Street had expected per First Call Corp. Donaldson, Lufkin & Jenrette shifted its rating to "buy" from "market perform," setting a 12-month price objective of $53 1/2. The broker likes the company's valuation compared with those of its peers in the broadcasting group.
• SmithKline Beecham (SBH) was ahead 15/16 to 67 1/8. It's selling its clinical laboratory and pharmacy benefit operations in a bid to shift focus to its core drug businesses. Quest Diagnostics (DGX) will buy SmithKline's clinical labs business for $1.3 billion, while Express Scripts (ESRX) will purchase the pharmacy benefit unit for $700 million. Quest stock picked up 2 1/2 to 21 15/16 and Express shares were up 4 5/8 to 66 9/16.