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Tech stocks drop after Apple, IBM earnings reports

Shares of technology companies dropped Tuesday as Wall Street's reaction to earnings reports from Apple Inc., IBM Corp. and others darkened investors' feelings about companies that make everything from computers and software to microchips and data center equipment.On Monday evening, Apple...

Shares of technology companies dropped Tuesday as Wall Street's reaction to earnings reports from Apple Inc., IBM Corp. and others darkened investors' feelings about companies that make everything from computers and software to microchips and data center equipment.

On Monday evening, Apple reported higher revenue and profit than analysts had predicted. The company sold more than 14 million iPhones. It also sold more iPad tablet computers than it did Mac laptops and desktops. However, analysts were looking for a higher number of iPads sold, and a stronger gross margin.

In a research note, Jefferies analyst Peter Misek noted that with Apple's shares gaining about $40 in the last two weeks, "it required an epic quarter for the stock to continue that trajectory."

IBM also beat forecasts Monday, but investors didn't like hearing about a shortfall in the company's outsourcing deals โ€” even though IBM said one large outsourcing contract would have caused overall signings to rise if it had been signed about a week earlier.

Apple's stock dropped $9.41, almost 3 percent, to $308.59. That's still relatively high; the stock had breached $300 for the first time ever last week.

Shares of IBM fell $5.74, or 4 percent, to $137.09.

Blockbuster iPhone sales didn't help Apple's competitors in trading Tuesday. Nokia Corp., the largest cell phone maker, saw shares fall 36 cents, or 3.3 percent, to $10.58. Shares of Research in Motion Ltd., maker of BlackBerry smart phones, declined $1.52, or 3.1 percent, to $47.02.

Apple is setting the standards for the modern tablet computer market with the iPad. PC makers are still trying to catch up. So far, an early batch of small tablets based on Google Inc.'s Android phone software are starting to trickle out, but there's no sign of a tablet running Microsoft Corp.'s Windows 7 system.

Shares of Hewlett-Packard Co., the world's biggest computer maker, slipped 50 cents to $42.82. Dell Inc.'s stock edged down 16 cents to $14.50. Shares of Microsoft dropped 73 cents, or 2.8 percent, to $25.09.

Big-name Internet stocks also declined. Web retailer Amazon.com Inc.'s shares lost $5.05, or 3.1 percent, to $158.51. Web search leader Google Inc.'s stock dipped $9.36 to $608.35. Netflix Inc., the DVD-by-mail and streaming movie service, saw shares fall $4.24, or 2.7 percent, to $148.76.

Networking equipment makers including Cisco Systems Inc. lost ground, as did chipmakers and companies that make their manufacturing equipment, which were broadly down; among the exceptions were Intel Corp. and Advanced Micro Devices Inc., both of which gained a few pennies in afternoon trading.

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