The news rippled through the data networking community, hitting industry peers such as Brocade Communications, which fell $6.96 to $30.14.
Techs Take a Tumble
Intel fell $1.01 to $28.89 after it reported profits sank 76 percent as the world's largest semiconductor maker was hit by a slowing economy, slack PC sales and a stinging price war. The Philadelphia Stock Exchange's semicondutor index fell 3.35 percent.
Apple Computer closed down $4.31 at $20.79, after the computer maker raised the possibility that revenue for the second half of its fiscal year could fall short of its earlier forecast.
Veritas met the Street's earnings estimate, but cut its annual growth target amid a prolonged slump in U.S. corporate technology spending. Investors were shocked by the warning, which came just 12 days after company executives reiterated previous guidance. Shares sank a whopping $13.34 to $37.08 and sector companies were hit, including Siebel Systems , down $5.91 at $37.64.
"You're waiting for the turn for so long and want to believe it's coming, and just when you start to get some evidence it is, you get contrary evidence — it wears on the psychology and the psyche of investors," said Charles White, president of investment firm Avatar Associates.
About half of the Dow's 30 components will issue their results this week. Among them was Boeing Co. , which added 83 cents to end at $57.13. The aerospace giant said profits before extraordinary items rose 27 percent on steady improvement in its core businesses. Boeing raised its forecast for revenues in 2001 by $1 billion.
AMR, whose American Airlines is the world's largest airline, reported a loss, blaming flagging business travel and high fuel costs. Shares fell 96 cents to $35.44.
So far, more than a quarter of the companies in the S&P 500 have reported earnings. Of those 144 companies, 63 percent have come in above expectations, 25 percent have met forecasts, and 12 percent have disappointed, according to Thomson Financial/First Call.
On Tuesday, the blue-chip Dow Jones industrial average jumped 134.27 points, or 1.28 percent, to 10,606.39, to close at its highest level in nearly a month. About half of the Dow's 30 components are set to report earnings this week.
The broad Standard & Poor's 500 Index climbed 11.99 points, or 1 percent, to 1,214.44. The tech-laced Nasdaq Composite Index rose 38.20 points, or 1.88 percent, to 2,067.32, snapping back after Monday's hefty 2.67 percent slide.
The Associated Press and Reuters contributed to this report