Microsoft head triggers sell-off in hi-tech stocks
Saturday 25 September 1999
That triggered wide-spread selling among US investors, driving the tech- heavy Nasdaq index down nearly 6 per cent on Thursday and through early yesterday afternoon. Microsoft saw over pounds 20bn wiped off its market value, costing chairman and chief executive Bill Gates and Mr Ballmer billions of pounds in paper losses.
"There is such an overvaluation of technology stocks, it is absurd," Mr Ballmer told a group of journalists at a technology conference in Seattle. "I could put our own company and others in that category."
He blamed a "gold rush" mentality for the market rises, saying that profits earned by technology companies don't justify the high prices. "It's bad for the long-term health of the economy," he added.
His remarks helped to drag down European tech stocks yesterday. They also rankled management at Misys, the systems integrator that is Britain's largest technology company. A spokesman for Misys, which fell 31p, or 5.2 per cent, to 564p termed Mr Ballmer's remarks "arrogant". He added: "The reality is that the situation in the States is totally different from the situation in Europe."
Other UK stocks with technology characteristics also fell. GEC, which is becoming a telecoms equipment maker, lost 5.3 per cent, Logica slid 3.8 per cent and Telewest fell 3.4 per cent.
Also weighing on the tech sector were worries about the impact of the recent earthquake in Taiwan on semiconductor and computer component manufacturers. Taiwan supplies 70 per cent of all notebook PCs as well as 80 per cent of high-powered graphic chips.
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