Stocks ended in the red again on Friday, as a week full of volatility continued into the weekend. What began with concerns about the European economy and potentially rising interest rates has morphed in a matter of days into an attitude of absolute gloom and doom. The S&P fell 1.2%% today, but the real selloff occurred in tech stocks, the sector from which all three of today’s laggards hail.
Microchip Technology (MCHP); One of this “Friday’s Slumping Stocks”
Microchip Technology (MCHP), Micron Technology (MU) and Intel (INTC) ended as today’s three noteworthy decliners.
Microchip Technology (MCHP)
To say that Microchip Technology single-handedly sparked the tech selloff would be an exaggeration. But the company had a large role in today’s decline. MCHP stock plunged 12.3% Friday after releasing preliminary second-quarter results yesterday that were significantly lower than the company’s prior guidance.
MCHP projected sales of around $546 million for the quarter, missing the $560 million to $575.9 million level the chipmaker had previously expected by a healthy margin. As if a revenue miss wasn’t enough, Microchip’s CEO Steve Sanghi decided to prognosticate. Sanghi said he thought his industry had entered another correction, and that the correction would probably continue for the foreseeable future.
Micron Technology (MU)
Unfortunately for Micron Technology, MU is also in the semiconductor industry. With Wall Street blindly panning tech stocks en masse, the Boise, Idaho-based company saw its shares stumble an incredible 9.3% on Friday. Even after today’s massive pullback, MU stock is up 28% in 2014 and more than 50% in the last year alone, so some more impatient investors are ready to lock in their gains.
While I think the mind-set behind today’s selloff is flawed, momentum investors should tread cautiously with MU stock.
Intel (INTC)
Even Intel, the $158 billion titan of chipmaking, wasn’t immune from today’s tech slump, as INTC stock lost 5.1% by the ring of the closing bell.
By far the largest company on today’s list, INTC also faces some daunting trends in the field. Again, I think the hectic, “run-for-the-hills-while-you-can” mentality is overdone, but Intel has some legitimate obstacles its facing.
The company is slated to report earnings on Tuesday, so we’ll see if there are any ominous comments on the state of its industry, but INTC is hoping that the PC market stabilizes. Analysts expect it to be OK, with sales increasing from $13.5 billion during the same period last year to $14.45 billion this year. Over the longer-term, Intel’s sales growth will have to make a tough shift away from making chips for PCs, though, with global PC sales rising just 0.1% year-over-year in the second quarter of 2014.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.
