Software stocks drag market down Dow off 4

November 24, 1992|By Bloomberg Business News

NEW YORK -- U.S. stocks declined yesterday amid concerns about the increasing budget deficit and a slump in shares of leading computer software companies.

The U.S. Treasury said the budget deficit was $48.9 million in October, exceeding economists' estimates and causing Treasury bond prices to fall.

"The weak bond market hurt the stock market," said William Lord, senior vice president in equity trading at Lehman Brothers.

The Dow Jones industrial average fell 4.32, to 3223.04, despite a more than 2-point rise in Westinghouse Electric Corp. and General Electric Corp. Declining common stocks outnumbered advancing issues by more than 4-to-3 on the New York Stock Exchange. Trading was moderate, with about 192 million shares changing hands.

Standard & Poor's 500 index and the NYSE composite stumbled after setting records on Friday. The S&P 500 index declined 1.53, to 425.12, and the NYSE composite fell 0.67, to 234.11.

The NASDAQ Combined Composite index slumped 3.78, to 638.82, with Microsoft Corp. accounting for a big part of the decline. Microsoft, the nation's biggest developer of computer software, plunged $6.50, to $88.50, after an analyst at Goldman, Sachs & Co. reduced his fiscal 1993 and 1994 earnings estimates on concerns about price cuts in Europe.

"Over-the-counter stocks were hit after what Goldman Sachs did to Microsoft and it weighed on the entire market," said Dennis Jarrett, market analyst at Kidder, Peabody & Co.

Goldman Sachs analyst Rick Sherlund lowered his earnings estimates for Microsoft on concerns the company will follow Lotus Development Corp. in cutting software prices in France. Shares of Lotus Development fell 75 cents, to $20.25. Borland International closed $1.625 lower, at $22.25; Novell Inc. slumped $1.25, to $30; Oracle Systems Corp. fell $1.125, to $21; BMC Software Inc. closed $3 lower, at $61.50; and Cisco Systems Inc. fell $1, to $73.

Compaq Computer Corp. and Apple Computer Corp. fell on concerns that a price war will soon develop in the personal computer industry. Salomon Brothers analyst Lucianne Painter said price wars will "flare up" in December and that unit sales will decline in the first or second quarter. Compaq closed $1.875 lower, at $40, and Apple Computer closed 75 cents lower, at $56.75.

Westinghouse rallied $2.375 at $12.125 on news that the company plans to exit its disastrous financial services business and take a pretax charge of $2.83 billion. The company also said it plans to sell four other "non-strategic" businesses, reduce its debt by $5 billion in two years, and cut its annual dividend to 40 cents a share from 72 cents.

General Electric gained $2.125 to $82.125 after Martin Marietta Corp. said it will buy the company's aerospace division for $3.05 billion in cash and stock. In addition, GE said on Friday it is increasing its quarterly dividend to 63 cents. Martin Marietta rose $5.625 to $63.25.

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