Technology companies are taking a beating on the equity markets amidst continuing concerns about the direction of the U.S. economy and the impact of rising energy prices on consumer spending.
Over the last few weeks, most tech stocks have declined 10 percent or more in value and many have recently fallen below their one-year high levels as jittery investors seek protection elsewhere in recession-proof stocks.
On Wednesday (Jan. 9), technology stocks attempted a rebound in early trading but this soon fizzled, adding to the growing list of problems executives must now contend with as the industry faces the possibility of a demand downturn.
Observers say the unpredictable movements on the equity market will persist for some time since "no stock in our space is recession proof," according to Kevin Kessel, an analyst covering the electronics manufacturing services sector at Bear Stearns & Co. Inc.
The hardest hit companies are in the semiconductor market. The Philadelphia Semiconductor Index, SOX, for instance, has fallen more than 34 percent to 358.22 since July when it hit 549.39, a 52-week high.
The price-weighted index of 18 leading chip manufacturers is officially in recession zone but is seen remaining under pressure as analysts drop revenue and profit forecasts for its component companies.
Shares in Intel Corp., the world's biggest semiconductor company by revenue, suffered over the last trading days as analysts soured on its prospects.
Since the beginning of 2008, for instance, Intel's stock price has fallen more than 16 percent although it had regained some traction as of midday trading on Wednesday.
Rival Advanced Micro Devices Inc. has faced even more intense pressure. The Sunnyvale, Calif.-based company's stock price fell to a new 52-week low of $5.55 in early trading today, down more than 72 percent from its 12-months high of $20.63.
The story is similar at Altera Corp. On Wednesday, the company's stock price tumbled to a 52-week low $17.50 before recovering slightly by noon to $17.70. The company has witnessed a 33 percent decline in its market value over the last year.