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Tech stocks lose safe harbor status, slip in 3Q

Technology stocks, which had been a safe harbor as the economy teetered in the first part of the year, shared the pain of other industries in the third quarter. Shares of the sector's steadiest performers were dragged down by fears that businesses and consumers will soon spend less.
/ Source: The Associated Press

Technology stocks, which had been a safe harbor as the economy teetered in the first part of the year, shared the pain of other industries in the third quarter. Shares of the sector's steadiest performers were dragged down by fears that businesses and consumers will soon spend less.

One of the hardest-hit companies was Internet search leader Google Inc., whose shares have endured their toughest year since the company went public in 2004. Recently investors have punished Google on worries that shriveling advertising budgets will hurt Google's ability to keep up its rapid growth.

Google's stock fell 24 percent for the July-September period. That makes it the second-toughest quarter for Google's stock after the January-March period of this year.

So far this calendar year, Google's stock is down 42 percent, falling from above $690 per share at the start of January to close at $400.52 on Tuesday.

The stock initially closed at $341.43, which would have been Google's lowest levels since mid-2006, but Nasdaq later said in a statement that it was canceling some "erroneous orders" from another market center that caused Google's stock price to precipitously drop minutes before the market closed.

The decline has vaporized $90 billion in shareholder wealth, leaving Google with a market value of $126 billion.

The quarter was also rough for Apple Inc. The iPod and Macintosh maker's shares fell 32 percent during the period, wiping out $47 billion in shareholder wealth, on concerns that slowing consumer spending is hurting the PC business, particularly the pricier models that are Apple's specialty.

The stock hit a new 52-week low Monday at $100.59. The stock regained some ground Tuesday, closing up 8 percent at $113.66.

Intel Corp., the world's largest semiconductor company, got its sails trimmed during the third quarter on fears that dampened purchases of PCs would reduce demand for Intel's chips. Its shares fell 13 percent during the period, chopping $16 billion from Intel's market value.

Some tech stocks were bright spots, however.

Hewlett-Packard Co. and IBM Corp., companies that have seen demand for their technology services go up in the ailing market because companies hope it will help them cut costs, both experienced significant gains during the third quarter.

HP's stock fared better, finishing the quarter about $2 ahead of where it started the quarter. HP's stock gained 3.8 percent to close at $46.24 on Tuesday.

Shares of IBM, meanwhile, have been sliding steadily during the midpoint of the quarter. After hitting a high of $130.93 per share on July 24, the stock has since fallen to as low as $111.47 per share, a sign that investors are worried the troubles in the financial services industry, one of IBM's most important customer segments, will hurt IBM's business.

IBM shares gained 2.2 percent to close at $116.96 on Tuesday.