By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Tech stocks joined in a broad
market rally Tuesday with most of the sector closing with gains as
investors reacted positively to the latest comments on U.S.
monetary policy from Federal Reserve chief Janet Yellen.
However, big losses from network-equipment maker Infoblox Inc.
and Web-hosting company Rackspace Hosting Inc. stood out in the
tech sector after both companies gave weaker-than expected earnings
outlooks late Monday.
The tech-heavy Nasdaq Composite Index (RIXF) rose almost 43
points, or 1%, to close as 4,191 after Yellen said volatility in
the global market doesn't prove to be a major risk to the U.S.
economy and that the Fed will keep with its ongoing
low-interest-rate monetary philosophy.
Among leading tech stocks, gains came from Apple Inc. (AAPL),
Yahoo Inc. (YHOO), Hewlett-Packard Co. (HPQ), Microsoft Corp.
(MSFT) and IBM Corp. (IBM).
However, Infoblox (BLOX) plunged by more than 48%, to close at
$17.19 a share after the company said late Monday that it expects
to report a second-quarter profit of 10 to 12 cents a share on
revenue between $60 million and $61 million. Wall Street analysts
had forecast Infoblox to earn 10 cents a share on $65.7 million in
sales for the quarter. Infoblox Chief Executive Robert Thomas said
the company suffered a shortfall of business in January, with fewer
deals worth $1 million or more than had been expected.
Needham & Co. analyst Alex Henderson cut his rating on
Infoblox to hold, and Sterne Agee analyst Alex Kurtz lowered his
rating on the company's stock to neutral from buy saying evidence
suggests that "lack of projected [2014] growth is a deeper issue
internally than merely a few key deals slipping during the
quarter."
Rackspace (RAX) shares fell by 19%, to close at $32.65 after the
Web-hosting company on Monday said Chief Executive Lanham Napier
would retire and be replaced by co-founder and former CEO Graham
Weston. Rackspace also said it would continue with shifting toward
being a cloud-software developer. Rackspace also forecast
weaker-than-expected revenue for all of 2014.
Groupon Inc. (GRPN) also ended the day in the red, falling more
than 6% to close at $10.40. The daily deal and e-commerce company
said in a Securities and Exchange Commission filing on Monday that
Jeff Holden, its senior vice president of product management, will
leave the company on March 18.
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