Technology stocks have plummeted, spurred by a downgrade and sharp decline in value for Intel shares.
Intel, which is seen by some as a benchmark for the industry, saw its shares fall 4.2 percent to $19.79, causing several high profile analysts to downgrade third-quarter estimates which has caused fears throughout the stock market that the technology sector is struggling again.
Analysts have reported a woeful start for computer sales in August, meaning that Intel chips are simply piling up in shops and warehouses without being sold, a trend that is likely to destroy its estimates for continuing strong growth over the next quarter.
According to the Wall Street Journal, analysts at Baird have downgraded their appraisal of Intel from “outperform” to “neutral”, while analysts at Chase and Wedbush have cut estimates for the third-quarter, a move that has caused many chip manufacturers’ stocks to fall.
The technology industry strengthened significantly in 2010, leading many to believe the worst of the recession was over, but Intel’s sharp and sudden fall is a reminder that we are not out of the woods yet. The climax of Intel’s FTC battle and the resignation of Mark Hurd at HP could both pinpoint downturns in the short term and possibly longer.