By Mike Tarsala, CBS.MarketWatch.com
NEW YORK (CBS.MW) -- Tech stocks took a dive Friday following Nortel's profit warning, disappointing earnings from Hewlett-Packard and Dell Computer, and jet attacks in Baghdad.
Shares of Nortel, the world's largest maker of fiber-optic gear, went into a tailspin a day after the company issued a revenue and profit warning. Nortel added that it will cut as many as 10,000 of its workers.
Canada-based Nortel's U.S.-listed shares trade on the Big Board, but they put a heavy drag on the tech-laden Nasdaq Composite, which plunged more than 127.86 points, or 5 percent, to 2,425.05 as telecom-equipment concerns rippled through the market.
The PSE Technology Index /zigman2/quotes/210598455/delayed PSE -0.04% dropped 4.7 percent, still ending the week with a miniscule gain.
Adding to the Nasdaq sell-off were worries over an air strike by U.S. and British warplanes in southern Iraq. Missiles struck radar and missile sites near Baghdad. There was no indication that cruise missiles were used in the attack, according to NBC News.
The large-cap Nasdaq 100 Index of the biggest tech companies dropped 6.7 percent while the Nasdaq Telecommunications Index, which tracks younger equipment makers, tumbled 6.9 percent..
Other networking shares were hit, as Nortel supplier JDS Uniphase was the most heavily traded Nasdaq stock, dropping 21 percent to $35.88. Cisco /zigman2/quotes/209509471/composite CSCO -0.38% shares dropped 8 percent to $28.25, on strong volume. The Amex Networking Index dropped 11 percent.
Aside from networking, computer stocks were the weakest sector, as the Goldman Hardware Index sank 8 percent.
Hewlett-Packard shares lost $3.22 to $33.13. The computer and printer maker came up short on revenue in its first quarter, due to lower sales in North America and continued competitive concerns in its server business.
The company indicated that problems with U.S. sales could quickly spread to other parts of the world, impairing it and other global companies.
Dell Computer /zigman2/quotes/203822527/composite DELL -1.35% shares, meanwhile, lost $1.50, or 6 percent, to $23.50, after the direct computer seller confirmed job cuts and posted financial results that were a penny less than the Wall Street consensus estimate. Dell also scaled back its fiscal first-quarter profit outlook.
Although profit was weak, the company's sales beat most analyst expectations. Revenue was $8.67 billion, up from $6.8 billion in the year-ago period.
The rising cost of doing business isn't helping the computer makers and tech companies in general. The U.S. producer price index surged 1.1 percent in January, compared with expectations of a 0.3 percent rise. While natural gas and other fast-rising energy costs affected PPI, the core rate, which excludes volatile food and energy components, also rose faster than expected.