Tech stocks take a tumble in afternoon trading
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9/01/09By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) — Technology stocks sank into the red Tuesday as the sector turned its back on an early rally highlighted by eBay Inc.’s deal to sell a majority stake in its Skype unit that values the Internet-telephony business at about $2.75 billion.
The tech-heavy Nasdaq Composite Index (COMP 1,971, -38.29, -1.91%) fell more than 34 points, or 1.7%, to 1,974. Both the Morgan Stanley High Tech 35 Index (MSH 493.96, -9.05, -1.80%) and the Philadelphia Semiconductor Index (SOX 299.75, -6.43, -2.10%) gave up more than 1.5%.
A report from Standard & Poor’s, which questioned the strength of the apparent recovery in the U.S. economy, caught much of the blame for the sell-off in equities. See full story.
EBay (EBAY 21.71, -0.44, -1.97%) said it would sell a stake of about 65% in Skype to a group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.
Terms call for eBay to receive about $1.9 billion in cash upon the completion of the sale and a note worth $125 million. EBay will retain the other 35% in Skype equity. Read more about eBay’s sale of Skype.
EBay’s shares initially rose after the deal was announced, but they turned south with the rest of the market, falling 39 cents, or nearly 2%, to $21.75.
Nearly every other major tech stock was also on the slide, with declines coming from Microsoft Corp. (MSFT 23.94, -0.71, -2.88%) , Cisco Systems Inc. (CSCO 21.18, -0.42, -1.94%) , IBM Corp. (IBM 116.77, -1.28, -1.08%) , Dell Inc. (DELL 15.13, -0.70, -4.40%) , Intel Corp. (INTC 19.74, -0.58, -2.84%) and Hewlett-Packard Co. (HPQ 43.81, -1.08, -2.41%) .
Also lower, shares of Apple Inc. (AAPL 165.83, -2.38, -1.41%) fell $1.93 to $166.20.
The company plans to hold an event in San Francisco on Sept. 9. Apple isn’t saying anything about what will occur at the event, but speculation suggests that there will be some kind of upgrade announced to its line of iPod digital media players.
Rex Crum is a reporter for MarketWatch in San Francisco.
