By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Tech stocks followed the broader
market south Wednesday, with Cisco Systems Inc. among the decliners
after Citigroup started its coverage of the company with a sell
recommendation and a list of concerns about the
networking-equipment giant.
The day's overall negative sentiment was fueled by reports that
the Federal Reserve may soon pull back on its bond-buying
program.
Cisco (CSCO) closed with a loss of 1.6%, at $20.88 after a team
of Citigroup analysts set a sell rating and an $18-a-share price
target on the company's stock, as part of a broad initiation of
coverage of several tech companies. Citigroup cited issues such as
Cisco losing market share in the data-center switching business as
well as long-term competitive threats to its core networking
business as reasons for its sell rating.
Citigroup forecast long-term revenue growth for Cisco of just 3%
to 5%, which is below the company's outlook for 5% to 7%
growth.
Citigroup also put a sell rating on BlackBerry Inc. (RIMM).
"Wind-down costs and purchase requirements make winding down
BlackBerry expensive," and as its subscribers decline, sales from
services should continue to falter as well, the brokerage said.
BlackBerry's shares closed at their break-even point of
$5.97.
Citigroup also issued a sell recommendation for Brocade
Communications Systems Inc. (BRCD). Brocade's shares fell more than
2% to $8.43.
Among other stocks in the tech sector, Citigroup started
coverage of Ciena Corp. (CIEND), Corning Inc. (GLW), Motorola
Solutions Inc. (MSI), Garmin Ltd. (GRMN), Ericsson (ERICY), Polycom
Inc. (PLCM), Juniper Networks Inc. (JNPR) and Infoblox Inc. (BLOX)
with neutral ratings, and set buy ratings on Qualcomm Inc. (QCOM),
Riverbed Technology Inc. (RVBD), F5 Networks Inc. (FFIV) and Nokia
Corp. (NOK).
The Nasdaq Composite Index (RIXF) ended up putting in its worst
performance in weeks, and fell almost 57 points, or 1.4%, to close
at 4,003. The Philadelphia Semiconductor Index (SOX) shed 1% and
the Morgan Stanley High Tech 35 Index (MSH) fell by 1.3%.
Despite the broad losses, Groupon Inc. (GRPN) managed to rise 1%
and close at $10.14 a share. Wells Fargo Securities analyst Trisha
Dill raised her rating on Groupon to outperform, or buy, from
market perform, and set a valuation range on Groupon's stock of $13
to $14 a share.
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