By Mike Tarsala, CBS.MarketWatch.com
NEW YORK (CBS.MW) -- A rally in technology stocks stalled Monday as job cuts and a dearth of fresh economic data helped keep stocks near the breakeven market.
The Nasdaq Composite lost 18.15 points, or 0.8 percent, at 2,173.38. The Nasdaq 100 Index fell 1.5 percent, while the Pacific Stock Exchange Technology Index /zigman2/quotes/210598455/delayed PSE +0.18% slipped 1 percent.
Further job cuts announced by 3Com /zigman2/quotes/201007310/composite COMS -6.01% sent the struggling networking gear-maker's shares 5.5 percent lower, helping to cut short a rally in the networking sector. The once-dominant Silicon Valley company announced it will slash its ranks of 10,000 workers to 7,000, and it will reorganize its business units. See full story.
Cisco Systems /zigman2/quotes/209509471/composite CSCO +0.80% shares lost 39 cents ahead of its fiscal third-quarter financial announcement, due out on Tuesday after the close of regular trading.
In a report that could set the tone for trading in the technology sector this week, the world's largest networking company is expected to announce earnings of 2 cents a share, down from 14 cents earned in the year-ago period, according to a survey of analysts by First Call/Thomson Financial. See story.
Earlier Monday, the company said it's inked an agreement to provide high-speed Internet routers for China Telecom's ChinaNet, one of the largest Internet service providers in China. Financial terms of the agreement were not disclosed.
With only 13 percent of S&P 500 companies left to report their quarterly results, First Call reported that first-quarter 2001 earnings are 3.8 percent below last year's results.
But that figure is expected to worsen once the nation's retailers and four major tech companies -- Cisco, Dell Computer, Hewlett-Packard and Applied Materials /zigman2/quotes/209393259/composite AMAT +1.21% -- report their results in mid-May. First Call projects final readings for first-quarter earnings to reveal a 6.2 percent decline.
Rounding out the action
Elsewhere, shares of Lucent Technologies /zigman2/quotes/222210431/composite LU -10.12% lost 6.2 percent as the company said it would replace Deborah Hopkins as chief financial officer. Frank D'Amelio, formerly group president of Lucent's switching and solutions group, has been appointed to succeed her.
Analyst James Parmalee at CS First Boston told clients that Hopkins' departure after a year on the job will be viewed as a negative, as she had recruited a number of individuals to fill senior finance positions. More resignations are now possible.
The Amex Networking Index lost 1.9 percent, although volatile shares of Ciena Corp. /zigman2/quotes/208745450/composite CIEN +0.51% rose 1.9 percent and Comverse Technology gained 2.9 percent.
Software shares slid, despite gains by Microsoft /zigman2/quotes/207732364/composite MSFT -0.39% , as Portal Software helped drag the group lower. Portal's shares lost 36 percent on heavy volume following a first-quarter warning it blamed on decreased customer spending. See full story.
Shares of Computer Associates lost 8.1 percent to $28.20, after the business software company corrected early Friday a "typographical error" in the preliminary fiscal fourth-quarter report it released on April 16. The company overstated reported diluted operating earnings by 24 cents a share (40 cents versus 16 cents). The restatement comes on the heels of media criticism about accounting tricks used for years to prop CA's earnings results.
Shares of BEA Systems lost 8.6 percent, while Adobe Systems /zigman2/quotes/200389143/composite ADBE +0.44% shares declined slightly. The Goldman Software Index lost 3 percent.
Typically volatile chip issues, the niche that often leads technology stocks either up or down, couldn't inspire a rally as the Philadelphia Semiconductor Index /zigman2/quotes/210598361/realtime SOX +0.24% lost 1.3 percent. Shares of Intel /zigman2/quotes/203649727/composite INTC +0.69% gained 0.9 percent to $31.16, while Micron /zigman2/quotes/205710729/composite MU +3.03% and Texas Instruments /zigman2/quotes/202237907/composite TXN -0.47% also moved higher.
Hardware stocks ended mostly lower on the session, as Apple /zigman2/quotes/202934861/composite AAPL +0.29% fell 3.1 percent, Brocade fell 7.6 percent, Compaq fell 2.3 percent and EMC fell 3.4 percent. The Goldman Hardware Index fell 0.9 percent, buoyed by gains in Network Appliance /zigman2/quotes/209297588/composite NTAP +9.36% , Lexmark International and Dell /zigman2/quotes/203822527/composite DELL 0.00% .