By Benjamin Pimentel
The tech sector plunged Friday as spooked investors joined in a broad-based sell-off that saw shares of McAfee Inc., Advanced Micro Devices Inc. and Palm Inc. bleeding heavy losses.
The Nasdaq Composite Index (RIXF) lost 2.5% to close at 2,045, strangled by declines in shares of major players. The tech-heavy benchmark ended the week down 5.1%.
The sector got caught in a broader market spiral that saw the Dow Jones Industrial Average (DJI) fall 250 points.
Major tech companies were in negative territory, including Apple Inc. (AAPL), Hewlett-Packard Co. (HPQ), Dell Inc. (DELL) and Google Inc. (GOOG).
Leading the decline was Palm (PALM) shares of which plunged 13.4%. AMD (AMD) also tumbled 6.7%.
Shares of McAfee (MFE) lost 4.3% after the company reported a 25% drop in profit.
"We think the street will view these results as disappointing," Deutsche Bank analyst Todd Raker wrote in a note. "It appears the macro has muted some of this momentum near-term, but remain encouraged that results will improve as the PC market and IT spending rebound."
Barclays Capital analyst Ben Reitzes affirmed the upbeat view of the PC space in a Friday note, saying, "checks ... still indicate rather healthy consumer PC unit demand trends in the back half of 2009."
But tech investors were taking a breather as the week drew to a close, and most major tech issues retreated. The Morgan Stanley High Tech 35 Index (MSH) fell 2.7%, while the Philadelphia Semiconductor Index (SOX) was off 3.5%.
Earlier in the day, a bright spot came from BMC Software Inc. (BMC), shares of which gained, a day after the company posted a higher quarterly profit. But the wave of gloom eventually caught up with the company whose shares ended the session down 0.2%.
Meanwhile, shares of RealNetworks Inc. (RNWK) fell 7.75%, after posting gains earlier in the session. Late Thursday, the digital media company swung to a third-quarter profit.
Shares of KLA-Tencor Corp. (KLAC) lost 5.2%. On Thursday, the semiconductor capital equipment company reported a higher quarterly profit.
Shares of chipmaker Maxim Integrated Products Inc. (MXIM) also sank 6.7% after the company reported lower quarterly profit.
Meanwhile, shares of Cisco Systems (CSCO) also were down 3%. Bloomberg News had reported that the tech giant was considering dropping its bid for Tandberg of Norway due to the opposition of some investors.
The company declined to comment, saying in a prepared statement, "We are aware of recent speculation in the market and as we are currently in the middle of a tender offer process, we are not able to comment."