War Continues to Drag
Down Technology Stocks

NEW YORK -- A spell of late-day jitters over the Iraq war resulted in a selloff of technology shares Friday, putting most major tech indexes deep in negative territory for the week.

The Nasdaq Composite Index slid 14.63, or 1.1%, to close at 1369.62. The selloff left the index down 3.7% for the week, although it's still up for the year by 2.6%. Morgan Stanley's high-tech index fell 3.80 to 295.82 Friday, and the Nasdaq 100 Index of nonfinancial stocks dropped 15.16 to 1046.77.

In hourly intervals

Volume on the Nasdaq Stock Market was 1.34 billion, with declining issues outpacing advancing issues, 1,619 to 1,437.

Among some tech heavyweights, Microsoft lost 37 cents to $24.67, while chip maker Intel shed 36 cents to $17.22, both on the Nasdaq Stock Market. On the New York Stock Exchange, International Business Machines slid 66 cents to $80.79, and computer and printer maker Hewlett-Packard fell 19 cents to $16.25.

Stocks drifted in and out of negative territory throughout the morning, then took a more decidedly downward direction after midday, with the pace of selling picking up before the close of trading. After a sharp drop on Monday, the week's remaining four sessions were characterized by choppy, directionless trading, a result of investors' hesitancy to take action pending some more certainty on the Iraq front. The general feeling on Wall Street that the war will be more prolonged than originally thought is helping to drag on the major indexes. (See complete coverage of the war in Iraq.)

"The market is drifting lower as investors sober up to what war really means," said Charles Ryan, equity analyst at BB&T Asset Management.

News Friday that U.S. consumer spending was flat in February for the second straight month provided little inspiration. Separately, a measure of consumer sentiment fell in March.

In tech news, investors shrugged off an analysts' gloomy outlook for the software sector. Goldman Sachs's Rick Sherlund trimmed estimates on a slew of the industry's biggest names, including Microsoft, Oracle, SAP, Siebel Systems and Veritas. Mr. Sherlund said software companies are likely to post earnings shortfalls for the March quarter. Although it may be tempting to use the war as a scapegoat, he said, their troubles won't be "entirely attributable to the war with Iraq, but rather to a slower underlying tone of business due to further economic weakness."

It was the second time in a month that Goldman slashed estimates on the software sector, and the market's reaction to the report was blase. Shares of software stocks were mixed: Oracle shed 26 cents to $11.10, while Siebel fell 18 cents to $8.37 and Veritas gained 35 cents to $17.99, all on Nasdaq. European software giant SAP slid 61 cents to $19.39 on the Big Board. The Goldman Sachs Software Index, used to gauge the overall industry's performance, slid 1.22, or 1.2%, to 102.30.

However, investors did respond to a downgrade for Macrovision, which tumbled $2.38, or 18%, to $10.92 on Nasdaq after J.P. Morgan slashed its rating to "underweight" from "neutral," saying the software company was likely to lose the first major compact-disc protection contract.

Also in software, Manugistics Group dropped 32 cents, or 12%, to $2.41 on Nasdaq after the software company said it plans to cut 7.4% of its staff. As a result of the layoffs, Manugistics expects related restructuring charges of about $4 million.

Elsewhere, Nextel Communications fell 38 cents to $13.60 on Nasdaq after the wireless-service provider registered to sell as much as $5 billion in mixed securities, according to a filing Thursday with the Securities and Exchange Commission.

On a positive note, Lucent Technologies gained 2 cents to $1.50 on the Big Board after the maker of telecommunications gear agreed to a $568 million settlement to resolve shareholder suits that alleged it engaged in financial fraud and aggressive sales practices.

-- Shaheen Pasha of Dow Jones Newswires contributed to this article.

Write to Katherine Meyer at katherine.meyer@wsj.com

Updated March 28, 2003 4:58 p.m.

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