Stocks Fall on Tech Jitters

Stocks fell on Friday as Wall Street was hit by software giant Microsoft Corp.'s warning of slower growth along with a host of other bleak corporate news.

``The net result is that people are less optimistic than before Microsoft had their comments,'' said Howard Kornblue, portfolio manager with ING Pilgrim, which manages $18 billion.

The Dow Jones industrial average lost 33.35 points to close at 10,576.65, while the technology-dominated Nasdaq Composite Index dropped 17.22 points to 2,029.37.

The broader Standard & Poor's 500 Index lost 4.17 points to 1,210.85.

For the week, the Dow rose 0.36 percent, the Nasdaq fell 2.7 percent and the S&P 500 off 0.40 percent. Year-to-date, the Dow is down 1.95 percent, the Nasdaq off 17.9 percent, and the S&P 500 off 8.3 percent.

Friday capped one of the busiest weeks this earnings period with a total of 1,500 companies handing in their scorecards over the five sessions.

After Thursday's market close, Microsoft posted profits that fell within Wall Street estimates, but warned revenue growth would slow in the current quarter amid still-sluggish demand for personal computers.

Microsoft, a significant driver of the Nasdaq composite and part of the Dow, fell 4.7 percent, or $3.39, to $69.18. The Microsoft slide accounted for two-thirds of the Dow decline.

Scientific-Atlanta Inc. tumbled more than 35 percent after the maker of digital set-top box units reported revenues that fell short of forecasts.

Scientific-Atlanta, whose digital interactive set-top boxes allow consumers to receive cable TV programming and interactive online services such as movies-on-demand, fell to $22.80, a loss of $12.28, a low unseen in nearly two years.

Nortel Networks of Canada reported a whopping loss of $19.4 billion as sales declined. The company did not give a forecast but said its financial health has improved. Its U.S.-listed shares fell 30 cents to $7.45, or nearly 4 percent.

Vitesse Semiconductor Corp. fell 7 percent, or $1.35 to $17.32, on Nasdaq after reporting a loss of $69.6 million. The communications chip maker blamed order cancellations and weaker demand for electronics.

Xilinx Inc., the supplier of integrated circuits, reported an 80-percent drop in profits and a steep revenue decline due to weaker shipments and a malaise in the semiconductor industry. Its stock fell $2.78 to $38.09.

Other tech losses included computer maker Gateway, which slid $3.60, or nearly 25 percent, to $10.99 after drastically lowering its estimates for the second half of 2001. Gateway said it anticipates breaking even, while Wall Street was expecting earnings of 11 cents a share in the third quarter and 21 cents a share in the fourth.

Other computer stocks were also hurting from a report Friday that the nation's slumping PC industry has led to the first decline in worldwide PC sales. Preliminary second-quarter results indicated that worldwide PC shipments totaled 30.4 million units, a decline of 1.9 percent from the second quarter of 2000, according to market researcher Gartner Dataquest.

Dell Computer fell 49 cents to $27.89 despite saying Thursday that demand is improving and that it is standing by its second-quarter earnings estimates of 16 cents a share.

While PMC-Sierra said it expects business to improve in the second half of 2001, it fell $4.07 to $27.24 after Bear Stearns downgraded the stock. The brokerage cited excessive inventories and slumping demand.

There were some gainers, which included companies that beat earnings estimates or predicted business will improve in the near term. EBay, which did both those things late Thursday, climbed $2.40 to $66.80.

Sun Microsystems, which surpassed earnings expectations by a penny a share, rose 59 cents to $15.03.

Earnings also factored into trading of non-tech issues. Hershey Foods fell $1.99 to $62.62 on profits that missed Wall Street's forecast by a penny.

Earnings aside, the broader market was mixed. Citigroup rose 41 cents to $50.56, while Coca Cola fell 59 cents to $46.11.

Volume came to 1.15 billion shares, below the 1.34 billion that were traded at the same point Thursday.

The Russell 2000 index, which measures the performance of smaller company stocks, inched up 0.39 to 487.93.

Overseas markets were lower Friday with France's CAC-40 ending the day down 1.0 percent, Britain's FT-SE 100 declining 0.9 percent and Germany's DAX index losing 1.1 percent. Japanese financial markets were closed Friday for a national holiday but will reopen Monday.

-- Reuters and the Associated Press contributed to this report.