Wall Street investors seem shy of the computer software sector, following disappointing consumer-spending reports and continued weakness in the PC market.
Software companies were hit hard, with only Microsoft making gains on the day. Adobe announced better than expected results for its second quarter last week – but year-on-year decline. Investors bailed out; Adobe shares lost $4.82, or 13 per cent, closing at $31.37 on Friday. The company’s net income fell 11 per cent, and it issued a profit warning for its third (upcoming) quarter.
Salomon Smith Barney analyst, Jonathan Rosenzweig, cut his second-half and 2003 forecast for the company. The analyst also downgraded his valuation of Macromedia stock to Neutral from Outperform, claiming a “lower level of confidence” in the company’s outlook through to 2004. Macromedia shares were decimated, losing ten per cent of their value on the day, to close at $15.22.
Apple stock hovered just beneath the $20 mark, rallying slightly towards the close of business on Friday. It reached $20.10, up 2.87 per cent.
Consumer spending Thursday’s University of Michigan report on US retail sales showed disappointing figures – suggesting that US consumer spending may be hitting a wall. Consumer spending becomes a key economic driver during recession. The report, which is only available to subscribers, showed that the preliminary Consumer Sentiment Index for June came in at 90.8, well below the 97.0 that economists were expecting. In May, the index was at 96.9, CNN reports.
Meanwhile, in the UK, weekend reports suggest a wave of job-cuts for City workers. This is in reaction to a general stock sell-off across markets, news reports claim.
This morning’s UK outlook seems better. Ruth Kelly, the UK’s Financial Secretary to the Treasury, told BBC Radio 4’s Today programme: “Clearly, there are short-term global uncertainties which are having an impact on stock markets around the world.”
Concerns regarding US company performance was one of these uncertainties, she said.