Tuesday tech troubles

[notiCIas]

Tuesday tech troubles

Nasdaq set to open lower after warning from Lucent, Alcoa sales disappointment.

July 11 2006: 7:33 AM EDT


NEW YORK (CNNMoney.com) -- A warning from telecom equipment maker Lucent Technologies could push tech stocks lower when U.S. markets open Tuesday.
At 6 a.m. ET, futures pointed to a lower start for the tech-heavy Nasdaq, but S&P futures indicated a higher beginning for the broader markets.

Lucent (Charts) said Monday it expects third-quarter earnings to fall due mainly to slower sales of wireless network equipment in North America.

Shares of Alcatel (Charts), the French equipment maker which is in the process of buying Lucent, were off 5 percent in Paris trading Tuesday, while Lucent shares fell about 3 percent in after-hours trading.

The warning came on the heels of another tech disappointment, as corporate data storage equipment maker EMC (Charts) reported results that missed its own targets.

"What's hurting the markets now is there's a lot of crosswinds and not enough tailwinds," said David Kelly, economic advisor with Putnam Investments. "What should be the tailwind helping the market is strong corporate earnings. But when we have Lucent and Alcoa disappointing, that takes away the help we could see from earnings.

"Instead we're left to focus on crosswinds such as monetary policy," Kelly said.

Also weighing on markets, Dow Jones industrial average component Alcoa (Charts) reported a higher second-quarter profit but disappointing second-quarter sales, sending its shares 5 percent lower in European trading Tuesday.

Oil prices were little changed the day ahead of the U.S. fuel inventory report, with U.S. light crude up 3 cents to $73.64 a barrel in electronic trading, while Brent crude was 6 cents higher at $72.95.

Treasury prices were slightly higher, with the 10-year note yield slipping to 5.12 percent from 5.13 percent late Monday.

Stocks in Asia closed lower on earnings concerns, while major indexes in Europe were also lower in early trading.

The dollar was higher against the euro and the yen in early trading ahead of Friday's meeting of the Bank of Japan, at which the central bank there is expected to begin its long-anticipated hike in interest rates.

In other corporate news, Internet Service provider America Online expects to trim $1 billion of operating profit through 2009 under a proposed plan to offer the online service free of charge to some customers, according to a report in the Wall Street Journal that cited internal company forecasts.

But the paper said the company expects the growth of Internet ad revenue over that time will ultimately leave the company more profitable. AOL and CNNMoney.com are both units of Time Warner (Charts).

Internet firm Google (Charts) plans to build an office and research center in Ann Arbor, Mich., that will have up to 1,000 employees, according to a report in the New York Times.

Retailer Williams-Sonoma (Charts) announced it would take a $5.7 million second-quarter severance charge related to the departure of its CEO Ed Mueller, who the company previously announced is leaving as of Friday.