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Market Wrap-up: Tech Stocks Get Battered

Technology stocks took a beating for the second time in a week, even though tech companies continued to report better-than-expected second-quarter earnings.

The Dow Jones industrial average declined 33.56 points, or 0.3%, to 10,969.22. The technology-laden Nasdaq Composite, however, dove 77.32 points, or 2.8%, to 2,684.45

Virtually every benchmark computer-related issue declined. Microsoft (MSFT) lost 3 5/8 to 91 1/16; IBM (IBM), 4 11/16 to 124 5/16; Sun Microsystems (SUNW), 3 1/2 to 67 3/16; Hewlett-Packard (HWP), 7 7/16 to 105 1/8; Oracle (ORCL), 1 7/8 to 36 1/4; Lucent Technologies (LU), 1 7/8 to 68 1/4; EMC (EMC), 3 1/8 to 60 3/16; and Cisco Systems (CSCO), 1 15/16 to 61 1/8.

Supply-chain software vendor i2 Technologies (ITWO) plunged 10 11/32, more than 24%, to 32 1/8 after Prudential Securities cut its rating on the stock to "hold" from "accumulate." Yesterday, i2 announced second-quarter revenue of $131.4 million, a 57% increase from the same period last year. Net income in the second quarter of 1999 was $8.5 million, or 11 cents per share, compared with $600,000, or 1 cent per share, in the second quarter of 1998. Both periods included acquisition-related charges.

Another big loser was Compuware (CPWR), which was cut to "buy" from "strong buy" by both CS First Boston and SG Cowen today. Its stock declined 6 7/8 to 26 3/4. The developer of productivity-enhancing systems yesterday reported record first-quarter revenues of $443.1 million, an increase of 30.8% from $338.6 million during the same quarter last year. Income from operations grew 64.2% to $135.9 million from $82.8 million in the first quarter of the previous fiscal year. Peter Karmanos Jr., the company's chairman and CEO, said the latest results "continue to support a 35% to 40% growth estimate for fiscal year 2000."

Internet book retailer Amazon.com (AMZN) plunged 18 7/16 to 107 as investors expressed concerns about the company's aggressive spending plans for its Web sites. After markets closed Wednesday, Seattle-based Amazon.com reported a pro forma net loss of $82.8 million, or 51 cents per share, compared with a pro forma net loss of $17 million, or 12 cents, a year before. Sales nearly tripled to $314.4 million.

One of the only winners among technology stocks today was Legato Systems (LGTO), which rose 4 5/16 to 78 7/8. The enterprise storage-management company yesterday announced record second-quarter revenue of $62 million, an increase of 65% over last year's second quarter. Net income, excluding merger-related costs, increased 242% to $12.5 million, from $3.7 million in the same fiscal period of 1998.

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