VAR500 Issues Sink with Other Tech Stocks

Publicly traded solution providers saw shares of their stocks tumble Monday along with hard-hit issues in the airline, insurance and financial services industries.

Shares of the Compaq, Hewlett-Packard and Cisco all retreated Monday, underscoring uncertainty surrounding key manufacturers with service arms that appear on the 2001 VARBusiness VAR500 (V500) list of leading solution providers. Bellwether IBM, for one, slipped 3.24 percent to $93.34.

Despite the significant drop, not issues retreated. Some shares managed to post gains despite the market momentum that took hold after the Fed's surprise decision to cut interest rates. That included shares of makers of video conferencing equipment and key V500 service companies. EDS, for example, pulled ahead $1 to $57 on heavy trading. The stock is one of several expected to benefit from increased defense spending on IT initiatives. Perot Systems Corp. also rose, posting a gain of $0.3 per share to end the day at $15.19.

The rise of companies expected to benefit from any uptick in IT defense spending, however, was not universal. For example, Unisys fell Monday by $0.68 or 6.42 percent to close at $9.92. Since rising to $19.70 in February, the company's stock has fallen to nearly the same level it was a year ago when it bottomed out at $9.70.

Accenture, meantime, lost $0.55 or 3.63 percent to close at $14.60, also on heavy volume. Computer Sciences Corp. fell similarly, losing 3.58 percent or $1.20 to close at $32.30. A year ago. shares of CSC stock traded above $80 per share. KPMG Consulting was off more than 5 percent, losing $0.70 per share to end the day at $13.05. The value is less than half of what shares traded for in February.

The steep drop in values particularly impacted those companies in the web services space, including several that have been turning around in recent months. AnswerThink, for example, fell 19.33 percent to $6.05. Since December 2000, when the company (V500 No. 134) bottomed out at $2.53 per share, the company has rebuilt both its reputation and its share price, which hovered around $10 per share earlier this month. Shares of beleaguered Razorfish (V500 No. 142) dropped 11.18 percent to $0.15, equaling its 52-week low set in August of this year. A year ago at this time, shares traded above $14 each.

Digitas (V500 No. 141), too, sunk. It was off 16.93 percent to $2.65. That was a new 52-week low and a stark contrast to September 15, 2000 when shares traded at $18.50 each. Meantime, Agency.com fell 6.69 percent or $0.22 to close at $3.07 on volume of 176,800 shares. The number of shares that traded Monday was 50 percent greater than on an average trading day.

Tanning Technology, a technology integration company and No. 311 on the 2001 V500 list, slipped 2.44 percent to close at $4. Like others, the company is well off highs achieved last September when shares traded for $17 each.

Smaller companies struggling to hold on were especially hard-hit Monday. TenFold, for one, which has been working to avoid a delisting on the NASDAQ exchange, saw its shares plummet 20 percent. It closed the day at $0.60, above historic lows, but back where it was shortly after newly named CEO Nancy Harvey took over to turn the company around.

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