The stock market collapsed on Wednesday following a three-day rally, as Nortel Networks Corp. (NT) and Palm Inc. (PALM) announced warnings about their quarterly earnings.
Nortel, the world's number-one supplier of telecom equipment, fell $2.76 to a price of $14. The company said the slowing economy has forced it to cut jobs and change quarterly forecasts.
PALM, the dominant handheld computer maker, plummeted $7-7/16 to $8-1/16. The company also warned of layoffs on account of the current US economic downturn.
The NASDAQ Composite Index plunged 118.15 points, or 5.99 percent of its total value, to 1,854.11. The technology-abundant index is now approximately 63 percent off its March 10, 2000 peak of 5,048.62.
"People are still concerned we're heading for a recession and a serious profit slump," said Kevin Bannon, chief investment officer at BNY Asset Management, which oversees about $60 billion in assets. "There are still people out there who don't appreciate how severe short-term earnings problems are."
The Dow Jones Industrial Average fell 162.19 points, or 1.63 percent, to 9,785.35. Walt Disney Co. (DIS) slipped $0.84 to $28.36 after the company outlined plans to cut three percent of its labor force in the weakening economy.
Thursday's story was much the same on Wall Street. Stocks slipped even further as blue-chip giant International Paper Co. (IP) warned its earnings would fall below estimates due to the slowing US economy.
International Paper, the world's largest paper and forest products company, fell $1.11 to $35.11.
The NASDAQ Composite Index closed down 33.59 points, or 1.81 percent, to 1,820.54 - its lowest close since early November 1998.
"Investors are concerned that order slowdowns and bulging inventories may augur more bad quarters ahead," said Alan Ackerman, chief market strategist at brokerage Fahnestock & Co. "We had some bad quarters before, and there is no indication at this moment that the heaviness in the market and the economy is likely to lift."
The blue-chip Dow Jones Industrial Average ended Thursday's market session in positive territory, gaining 13.71 points, or 0.14 percent, at 9,799.06. The broader Standard & Poor's 500 Index, was down 5.34 points, or 0.46 percent, to 1,147.95.
Pfizer has plans to work more closely with Microsoft and IBM
Drug maker Pfizer (PFE) announced its plans on Thursday to form an independent company with Microsoft Corp. (MSFT) and International Business Machines Corp. (IBM) to develop new software for doctors. The software will help doctors manage their practices and medical information.Financial details concerning the independent company have not yet been unveiled. But, Pfizer said that the company will start selling software and services by the end of the year.
Executives said that the company is likely to be based in the northeast and will employ approximately 500 employees. While they expect short-term profits to be positive, some analysts were skeptical.
"This is a vision. There are still strategy issues that have to be resolved," Mike Davis, an analyst with advisory firm Gartner Group, said of the alliance.
Pfizer is not the only drug company that is expanding into technology, as number-two drug maker Merck & Co. (MRK) and Eli Lilly and Co. (LLY) formed separate venture funds to invest in small companies developing e-commerce capabilities.
"If you look at the way [Pfizer's] marketing is structured now, it is all aimed at getting doctors convinced that their drug is better," said Faraz Naqvi, co-manager of Dresdner RCM Global Healthcare Fund. "This is just another way of getting integrated into doctors' offices.... Doctors are some of the most technologically illiterate people out there. If you look at medicine, it's way behind in movement into technology. So for IBM and Microsoft, it's a whole new market for them."
Pfizer shares were up $0.59 at $40.52, on Thursday. Microsoft shares were up 11/16 to $56-1/4 on the NASDAQ, while IBM was up $1.85 at $96.26 on the New York Stock Exchange.
