Business Tech

Red ink flowed throughout the broader markets Thursday following unsettling news that General Motors auditors are casting doubt on the company's ability to survive..

The Dow Jones Industrial Average closed down 281.40 points, or 4 percent, to 6,594.44, a low it hasn't seen since 1997.

The Dow's decline has been rapid. Just four trading days ago it was in the 7,000 range. And just 13 trading days before that it was in the 8,000s, where it languished for months.

The Nasdaq closed down 54.15 points, or down 4 percent, to 1,200, and the CNET Tech Index dropped 27.34 points, or 2.76 percent, to close at 962.74.

A few tech companies managed to swim against the tide.

Leap Wireless stock rose 4.47 percent to $28.27 a share. The company announced its wholly owned subsidiary, Cricket Communications, struck a deal with Samsung Telecommunications America, in which Samsung's SCH-r211 bar-style phone would be available to customers using Cricket's unlimited wireless services.

And Chinese Internet search company Baidu jumped 2.66 percent to $161.51 a share, after a Citi Investment Research analyst upgraded the company to a "buy" from a "sell," according to an Associated Press report. The analyst upgraded the stock based on weekly improvements to traffic on its site since January, according to the report.

Networking gear maker Ciena saw its stock jump 11 percent to $5.93 a share during the regular trading session Thursday, after announcing it would cut 200 positions, or 9 percent of its workforce, and close its research and development facility in Massachusetts.

That news apparently pleased investors, despite the company also reporting a 26-percent revenue drop in the first quarter over year ago figures and a net loss of $24.8 million, compared with a net profit of $28.8 million, during the same period.

Adobe Systems was another company that posted share price gains, despite issuing a first-quarter warning after the markets closed Wednesday. The software maker said it would miss its earlier revenue forecasts, but expected to remain on target with its profit projections.

Shares of Adobe advanced 3.68 percent to $16.92 a share on Thursday.

Updated at 7:45 a.m. PST with new stock prices and information on Dell's two largest investors.

Dell's stock acted like a bit of a contrarian against the broader markets for a second day Wednesday, after a peculiar rise of 8.5 percent the previous day on no news.

Dell closed at $9.15 a share on Tuesday, up 72 cents from the previous day, while the broader markets posted losses. Dell's share performance was rather peculiar, given that the company had issued no significant financial news and that the rumor mill was relatively quiet.

Investors, at most, could have been responding to Dell's chief financial officer, who, as noted in the Austin American Stateman, expected to increase the company's level of manufacturing outsourcing.

But in early morning trading Wednesday, Dell gave up some of those gains, falling 3.9 percent to $8.79 a share, while the broader markets advanced. The Dow rose 0.83 percent to 6,781.61, and the Nasdaq was up 1.46 percent to 1,340.32.

Last month, the company's two largest investors, CEO Michael Dell and Southeastern Asset Management, increased their stakes in the company, as Dell's shares fell to 52-week lows.

The company's founder upped his stake to 12 percent in mid-February, from his previous position of 11.2 percent. Southeastern Asset Management, meanwhile, increased its stake to 7.5 percent in early February, up from 5.3 percent.

Several young companies anticipate initial public offerings this week, but there's not a single high-tech outfit among them.

There's one green-tech company however. Changing World Technologies, a company that converts waste into oil, is one of four IPOs poised to hit Wall Street this week. Changing World is scheduled to price its IPO as early as Wednesday and could raise as much as $42 million, if it prices on the high end of its $11 to $15 per share range.

Nonetheless, while the four Wall Street prospects offer some excitement to their investors, there's little reason to believe that with a recession in full swing many companies will line behind them.

"If these four companies are able to successfully complete their IPO and post positive returns for at least a couple weeks, it could motivate some of the companies that have recently filed (to go public). But I don't see the flood gates opening. It takes time for the IPO market to come back," said Paul Bard, research director of Renaissance Capital, an IPO research and investment management services company.

One of the most recent companies to file its paperwork to go public is OpenTable, an online dining reservations company. One investment banker, who requested anonymity, noted OpenTable faces a number of challenges if it moves forward with an IPO during this recessionary climate.

Fewer people are dining out, as the unemployment rate soared to 7.6 percent in January, presenting a potential slowdown in business, noted the investment banker. OpenTable's annual revenues of approximately $40 million in 2007 and the first nine months of 2008 are roughly half the level investors like to see in an IPO.

OpenTable, having just filed its paperwork, however, is still a number of months away from doing its road show to talk with potential investors and hammering out its IPO price. For many in OpenTable's situation, there's no rush: some companies have languished in the IPO pipeline for over half a year and longer.

Companies set to price their IPOs and begin trading this week, in addition to Changing World Technologies, include Mead Johnson Nutrition, an infant formula maker, and O'Gara Group, a homeland security defense company. Both Mead and O'Gara are scheduled to price their IPOs Tuesday after the markets close and begin trading Wednesday, according to their underwriters.

Madison Square Capital, a real estate investment trust, is expected to price its IPO as early as Wednesday night, as with Changing World, and begin trading on Thursday.

The disappearing IPO market
They'll be among the few in recent months to brave the public markets. The number of U.S. IPOs fell last year by 85.7 percent to 29 deals across all industry sectors, according to Thomson Reuters. Within the tech sector, that decline was even sharper--dropping a staggering 90 percent to four deals last year.

But don't entirely write off 2009 quite yet.

"If you can say there is any consensus at all, overall, it feels like investors believe the market will recover in the middle of the year and, typically, IPOs have been a lagging indicator to the overall market," said David Ludwig, managing director of equity markets for Goldman Sach's technology, media, and telecom practice. "Usually it takes a quarter or two for IPO market to become robust again once the market turns."

He noted, however, that given the IPO dry spell has lasted longer than in the past, there may be more companies willing to launch an IPO before the markets turn, especially if some of the first deals that test the market are well executed.

The last IPO to hit the markets was Grand Canyon Education, an Arizona-based online university that ended nearly a four-month IPO dought, when it debuted in late November at $12 a share. Grand Canyon's shares have outperformed the markets since its debut and the stock reached as high as $20.25 a share on Monday.

Who's on tap?
The performance of Grand Canyon apparently brightened the prospects for Bridgepoint Education, another online university, which filed its IPO paperwork with the Securities and Exchange Commission in late December. There's a reason both online schools appear to be doing well.

"Bridgepoint and Grand Canyon are educational companies and in a recession, when people are out of work, they go back to school," said Lise Buyer, founder of Class V Group, a firm that advises start-ups on preparing their companies to go public.

Other tech companies that recently filed IPO papers and remain in the IPO pipeline include Rosetta Stone, a foreign language training software maker, Emdeon, an automated payment system for the healthcare industry and Internet company OpenTable.

Although nearly two dozen companies have filed formal IPO paperwork since the market malaise in October, many are getting cold feet, Bard said. Since the start of the year, two companies have filed for an IPO while seven have withdrawn. And last year, 150 companies filed plans to go public but 184 companies withdrew, according to Renaissance Capital's IPOhome.com.

Within the technology sector, the companies that show the greater potential of offering up IPO candidates in this down market include software and services, which are viewed as defensive sub-sectors, said Cully Davis, managing director of Credit Suisse's technology practice for equity capital markets.

Meanwhile, other areas that appear to have gained some of that interest, investment bankers say, are security software, subscription-based services, network management, businesses around Netbooks, solid state drives, and clean tech.

Historically, tech and health care companies have been the lifeblood of the IPO market. Last year, tech and health care both ranked second with four IPOs each, behind the energy and power industry, which accounted for seven of the 29 deals that launched during the year. But in 2007, tech dished up the most IPOs with 40 of the 203 deals, followed by health care with 39 deals, according to Thomson Reuters.

What makes for a good IPO candidate?
Companies with lower capital costs will have an easier time posting a profit and, as a result, stand a better chance of launching an IPO, noted Buyer, who also cited annual revenues in excess of $100 million as another key item companies need to aim for.

Currently, the number of executives and venture capitalists seeking out bankers to take the companies public has substantially dropped, as they focus more on operating their businesses in the current economic and valuation environment, Ludwig said. But for those companies that are closer to being ready to access the markets, there's still interest.

There are caveats, investment bankers say. A couple years ago, tech investors wanted to latch onto IPOs that featured smaller companies with hyper-growth achieved through investing into sales and marketing, said Davis. But now, with their portfolios down, investors are less interested in hyper-growth companies and more focused on demonstrated profitability and realistic growth.

So when will the IPO market comes back again? Most likely, when investors decide a fresh face on Wall Street is a better bet than investing in an old one.

Shares of Dell and Qualcomm plunged by double digits Monday, as the Dow Jones Industrial Average went into a free-fall of nearly 700 points on news that the economy is officially in a recession.

The Dow closed down 679.95 points, or 7.7 percent, to end the day at 8,149.09, breaking a five-day run at posting gains.

Meanwhile, the tech-heavy Nasdaq fell further, declining 8.95 percent, or 137.50 points, to end at 1,398.07. And the CNET Tech Index dropped 7 percent to 1,014.20.

Despite reports that retailers fared better than expected over Black Friday, PC maker Dell saw its shares give up 10 percent during the regular trading session to close at $10.05 a share.

Shares of Qualcomm dropped nearly 10.8 percent to $29.96 a share at the session's close, and Comcast stumbled 10.9 percent to end the day at $15.45 a share.

A wide swath of technology stocks posted double-digit gains Tuesday, as the broader markets surged to exceptionally high levels as investors anticipated an interest rate cut by the Federal Reserve.

Cisco Systems, Amazon.com, Dell, and Comcast were just some of the tech players whose shares crested above 10 percent gains at the market's close, as the Dow Jones Industrial Average jumped a whopping 889.35 points to 9,065.12, up 10.9 percent.

The tech-heavy Nasdaq rose 143.57 points, or 9.5 percent, to close at 1,649.47, while the S&P 500 soared 91.6 points to 940.51, or 10.8 percent.

And the CNET Tech Index rose to even higher levels, posting an 11.3 percent gain, up 120.98 points to 1193.35.

Cisco jumped to $18.31 a share, closing the day up 13.9 percent, while Dell also posted strong gains of 12.1 percent to close at $13.15 per share. Qualcomm, another hardware company, increased by 14.9 percent to $38.91 a share.

But by far Comcast posted the largest gain among the most actively traded stocks on the Nasdaq, rising a whopping 25.8 percent to close at $16.96 a share.

Amazon pulled in a strong performance, climbing 13 percent to $56.04 a share, while Google rose 11.9 percent to $368.75 a share.

Advanced Micro Devices falls nearly 10 percent on Thursday, as the broader markets pull in competing directions.

AMD declined 9.7 percent to $3.27 a share, following the release of its third quarter results the previous day.

The chip maker may have found some comfort in that its share price didn't plunge as far as Cadence Design Systems, which fell a whopping 25.5 percent to $3.22 a share. Cadence took a hit, after the company disclosed it expects to restate its financial results for the first quarter and first half of the year, as it investigates possible problems with revenue recognition, according to a report in the Wall Street Journal.

These stocks mirrored the red ink found on the Nasdaq, which closed down 11.84 points to 1,603.91.

Although the tech-heavy Nasdaq closed down, the CNET Tech Index closed up 8.99 points to end the day at 1,122.98.

And it wasn't alone. The Dow Jones Industrial average closed up 172.04 points to 8,691.25, while the S&P 500 ended the day up 11.33 points to close at 908.11.

Sun Microsystems shares plunged a whopping 17.5 percent on Tuesday, after the company warned that its first-quarter results would fall short of expectations.

Sun closed at $4.77 a share, down $1.01, marking the third time this month that its shares have ended the trading session below $5 a share.

But Sun wasn't the only tech stock bleeding red, as evidenced by the declines in the broader markets.

The Dow Jones Industrial Average closed at 9,033.66, down 231.77 points, or 2.5 percent. And the tech-heavy Nasdaq ended the day at 1,696.68, down 73.35 points, or just over 4 percent.

The CNET Tech Index, meanwhile, fell to 1171.19, down 63.36 points, or 5 percent.

Apple, which reported its quarterly results Tuesday, was off 7 percent to close at $91.49 a share, while Qualcomm took a 9.1 percent hit to close at $36.63 a share.

Shares of Amazon.com sold off sharply Tuesday, and Apple failed to swim against the tide despite rolling out a revamped MacBook line, as the broader markets gave up gains from its stellar performance a day earlier.

Amazon fell 9.93 percent to end the day at $55.86 a share, with little news out on the company. Amazon, however, is set report its third-quarter results on October 22.

Apple, meanwhile, received little love from investors, after rolling out its new MacBook lineup. The computer maker's stock fell 5.6 percent to end the day at $104.08 a share. Investors, who in general were selling off stocks across the board, may have also been less than happy that the computer maker was rolling out an under-$1,000 notebook.

Intel, meanwhile, jumped as much as 6 percent in after-hours trading, after reporting a 12 percent increase in third-quarter profit. Intel, which reported its quarterly results after the markets closed, ended the day down 6.24 percent to $15.93 a share, during the regular trading hours.

Tech stocks, overall, were down, with the CNET Tech Index giving up 39.15 points to end the day at 1,228.68.

The tech-heavy Nasdaq, meanwhile, closed down 65.24 points, or 3.5 percent, to close at 1,779.01. The S&P 500 fell 5.34 points, or 0.5 percent, to close at 998.01. And the Dow Jones Industrial Average dipped 76.72 points, or less than 1 percent, to end the day at 9,310.99. On Monday, the Dow was up a record 936 points.

Click here for ongoing coverage from CNET News, "Tough times for tech."

This post was updated at 1:26 p.m. PDT with to reflect the market's closing numbers.

The beleaguered Dow Jones Industrial Index surged back up above 9,000 in its largest single-day point gain ever Monday, while Apple, Microsoft, Dell, and other tech companies captured double-digit gains.

After taking investors on a hellacious ride last week, Wall Street didn't disappoint expectations of a better week with the Dow soaring 936.42 points to close at 9,9387.61, after suffering eight consecutive days of losses from its previous post of 10,850.66 on September 30.

Investors apparently were pleased with several new developments including the central banks agreeing to pump more funds into U.S. financial institutions and the U.S. Treasury agreeing to buy some bank stocks, as noted in posting on CBSNews.com.

The Nasdaq, which posted gains for the last couple of days, climbed 194.74 points to close at 1,844.25, in part fueled by double-digit gains from Microsoft, Apple, Oracle, Cisco, Dell, and Research in Motion. All these stocks were among the most actively traded on Nasdaq.

Microsoft climbed 18.6 percent to end the day at $25.50 a share, while computer makers Dell rose nearly 14.5 percent to $15.21 a share and Apple jumped approximately 13.5 percent to close at $110.26 a share.

Likely helping to push Apple's stock upwards is the company's plan to debut new notebook versions on Tuesday.

Other tech companies to keep an eye on this week are Intel and eBay, which are reporting earnings on Tuesday and Wednesday, respectively.

Oracle posted a 13 percent gain to close the regular trading session at $18.86 a share, while Cisco Systems ended the day up 11.8 percent to close at $19.27 a share. Research in Motion, maker of the popular BlackBerry smartphone, soared 15.5 percent to close at $63.87.

The CNET Tech Index, meanwhile, climbed as high as 139.10 points to close at 1,267.83 on Monday.