Negative Intel Report, Slew of Warnings Slam Techs

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Heavy selling took its toll on technology stocks Tuesday, after a series of earnings warnings and downgrades led by a negative analyst report for tech sector bellwether Intel .

As a result of the news, the tech-heavy Nasdaq composite index dropped 2.2 percent, to 1,963.43 — its largest one-day decline since March 15.

Shares of chipmaking giant Intel fell 22 cents, or 0.84 percent, to $26.11 following a Lehman Brothers report that cut its earnings forecast, blaming lower seasonal demand for PCs.Lehman cut its forecast on the tech leader’s third-quarter earnings from 30 cents, down a penny. Intel is expected to report earnings on July 13. Last week, Deutsche Securities downgraded Intel from “Buy” to “Hold.”

Among those also losing ground was Business Objects , which tumbled 7.8 percent on a J.P. Morgan downgrade to “underweight” from “neutral. Morgan cited weakness in domestic and U.K. sales for the enterprise planning software maker, as well as increasing competition from rival Cognos .

Networking technology player Conexant Systems slid 42.6 percent following management warnings that fiscal third-quarter revenue and earnings would come in lower than previous guidance. The company blamed soft wireless LAN sales. Revised guidance is for earnings of 2 cents per share, down from earlier guidance of 3 cents to 5 cents per share. Revenue estimates were cut to $265 million, from $308 million to $323 million.

Veritas Software also suffered during the day’s trading, dropping 36 percent after warning that second-quarter earnings and revenue would miss quarterly expectations, caused by shallow license sales in the U.S.

Shares of identity software maker Entrust dropped 26.8 percent following warnings this afternoon of a second-quarter loss and less-than-expected revenue, on poor sales. The company said it now expects to post a loss of 4 cents a share for the quarter; Wall Street consensus had called for a profit of 5 cents a share, according to Thomson Financial/First Call estimates. Similarly, revenue will come it at $19.5 million, short of an earlier $23.7 million consensus prediction. For the entire fiscal year, Entrust said it expects to break even; the Street had forecasted 4 cents a share in earnings.

Banc of America’s downgrade of Lattice Semiconductor prompted a 15.3 percent slide in shares of the chipmaker, citing an overly optimistic valuation compared to rivals like Xilinx and Altera .

Business and service assurance software developer Micromuse plummeted 20.1 percent following management guidance of lackluster revenue for third quarter. The company cited long sales cycles contributing to reduced expected revenue of $34.5 million to $35.5 million — below Wall Street expectations of $39.4 million.Following the news, W.R. Hambrecht cut its rating on shares of Micromuse from “buy” to “hold.”

Enterprise software giant PeopleSoft dropped slightly following a downgrade by Pacific Growth Equities on concerns about license revenue. The stock, cut to “equal weight” from “over weight,” slipped 2.3 percent. Pacific Growth said in its report that it expects the company’s quarterly licensing revenue to hit near the low end of PeopleSoft’s guidance, of $150 million to $170 million.

The company said it now anticipates earnings of 18 to 20 cents a share, barring one-time expenses, and revenue of $475 million to $485 million. Wall Street anticipated earnings of 24 cents per share and total revenue of $501 million, according to Thomson Financial/First Call estimates.