Nasdaq Falls Midday on Tech Profit Warnings

U.S. technology and e-commerce stocks were falling at midday Friday for a second day in a row, as a wave of earnings disappointments continued to keep investors on edge.

The Nasdaq Composite Index was down 52.54 at 2701.74 in late-morning trading, led by declines in Cisco Systems (Nasdaq: CSCO), Ericsson (Nasdaq: ERICY) and PMC-Sierra (Nasdaq: PMCS).

Cisco was down $2.88 at $36.44, as UBS Warburg reportedly cut estimates for the company.

Ericsson American depositary receipts were down $2.06 at $10.94 after the company reported weak quarterly results and plans to outsource its mobile phone production, in a bid to cut costs.

PMC-Sierra, meanwhile, was down $26.12 at $69.75 after the company's fourth-quarter results sparked a host of analysts downgrades. Reports said company officials warned that the slowing economy would cut into demand in coming months.

The networking equipment maker said revenue for the quarter ended December 31st rose 152 percent from a year earlier to $231.7 million. Compared with the previous quarter, though, revenue grew just 17 percent.

PMC-Sierra's warning follows a similar one Thursday from Corning, Inc., which helped sparked the slide in tech stocks.

Egghead's Fall

E-Commerce stocks also slid on Friday, led by a 20 percent drop in the shares of Egghead, Inc. (Nasdaq: EGGS).

Egghead, which sells hardware, software and other computer-related wares over the Internet, said sales for the quarter ended December 31st will be lower than previously thought because of weak demand for personal computers and other technology products. The stock was down 22 cents at $1.

Troubled e-commerce firm eToys, Inc. (Nasdaq: ETYS), was also down 5 cents to 27 cents, after missing analyst estimates for the third quarter ended December 31st and warning that it may run out of cash. The stock had gained earlier this month, touching the $1 level, on speculation that the pure play found a buyer.

The company, once a high-flier, has become a symbol of the dot-com shakeout.

eToys for Pennies

eToys said sales for the quarter totaled US$131.2 million, up 23 percent from a year earlier, but below original expectations. The company lost $74.5 million, or 52 cents per share, before extraordinary charges, compared with a loss of $62.5 million, also 52 cents, a year earlier.

eToys said it has enough cash to meet its needs until about March 31st. After that, however, the company said it will need "an additional, substantial capital infusion."

The company said it is continuing to look for a buyer or partner, or another way to restructure its business. In the meantime, eToys has reportedly met with its creditors who have agreed not to seek repayment of outstanding debts through January 31st.

eToys said that it no longer expects a profit by the fiscal year ending in March 2003, and can no longer predict that its quarterly loss will narrow in subsequent quarters.

Pure Play Droppers

E-commerce companies E*Trade Group, Inc. (Nasdaq: EGRP) and Webvan Group (Nasdaq: WBVN) were also lower Friday, giving back gains made a day ago after the companies reported quarterly results.

E*Trade was down 50 cents at $13.44, and Webvan was down 16 cents at 62 cents.