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Spokane, Washington  Est. May 19, 1883

Tech Stocks Slide, But Dow Hangs In There

Associated Press

Computer-related shares slid sharply Monday, but the broad market suffered only minor losses as overall profit expectations remained firm despite a spate of warnings by big-name technology shares.

The Dow Jones industrial average fell 2.25 to 8,567.14. A midday gain of 55 points had put the Dow above 8,600 for the first time and threatened to top last Tuesday’s record close at 8,584.83.

Broader stock measures also pulled back during the afternoon, but only the technology-laden Nasdaq composite index suffered heavy damage, falling 28.33, or 1.6 percent, to 1,725.16.

Monday’s weakness in the technology group was hardly surprising given late Friday’s revelation that Compaq Computer only expects to break even for the first quarter.

However, since the broad market tumbled on Thursday after a profit warning from Intel, but then rebounded on Friday despite a warning from Motorola, it wasn’t clear what impact Compaq’s announcement would have Monday morning.

“What we’re seeing is that people are reluctant to leave the market, but very afraid of earnings explosions like this (in technology),” said Charles Pradilla, chief investment strategist at Cowen & Co.

Some of the stocks that moved substantially or traded heavily Monday:

NYSE

Compaq Computer, down 2-3/16 at 25-7/16.

Dell Computer (Nasdaq), down 6-1/8 at 63-1/8.

Compaq warned late Friday that flat computer sales and price wars would wipe out its first-quarter profit. Compaq said it cut prices for business desktop machines more steeply than expected due to intense competition for corporate customers. The Compaq announcement followed profit warnings by Intel and Motorola the prior two days.

Northrop Grumman, down 20-1/8 at 117-1/2.

Lockheed Martin, up 13/16 at 116.

The proposed $8.3 billion merger between two of the nation’s largest defense contractors may be blocked by the Justice Department due to antitrust concerns, the companies said. The deal would combine what had been five independent companies just three years ago in an industry grappling with decreased military spending since the end of the Cold War.

Alumax, up 10-5/16 at 47.

Aluminum Co. of America, down 3/16 at 71-7/16.

Alcoa, the world’s largest aluminum producer, agreed to acquire the No. 3 producer for $3.8 billion in cash, stock and assumed debt. Alcoa is to buy half of Alumax’s stock for $50-a-share in cash, or $1.39 billion, and then convert each remaining Alumax share into 0.6975 share of Alcoa.

NASDAQ

Proxima, up 2-5/16 at 10-5/8.

The maker of multimedia projectors for computers agreed to be acquired by ASK ASA of Norway for $84 million in cash or $11 a share.