Dell looks down in the dumps

It took all week, but on Friday Wall Street finally managed to remember what it does when the general outlook is doubtful. Deprived of a President, and beset with ambiguous economic data, there was really only one thing to do: heavily sell the first technology stock to stick its neck out.

It took all week, but on Friday Wall Street finally managed to remember what it does when the general outlook is doubtful. Deprived of a President, and beset with ambiguous economic data, there was really only one thing to do: heavily sell the first technology stock to stick its neck out.

The unfortunate victim of this was Dell. After surviving intact for almost all of a deeply troubled week, Dell waited until lunchtime on Friday to announce that its sales growth will be slowing to a measly 20 per cent next year.

The company, as the world pioneer of the direct-to-customer sales strategy, had until earlier this year been the classic darling of the tech-boom. Nobody could see the demand for computers diminishing, and Dell's eternal profitability seemed certain.

Unfortunately, as the signs of a US economic slowdown have grown clearer, corporate America has been gradually winding down its spending on new machines. Despite Dell's efforts to shift its business to the laptop and server side of the market - which has been less hard-hit - the company has now disappointed on three different occasions.

The stock has tumbled by 55 per cent over the course of the year, and a further 21 per cent was hewn off its value on Friday. Unless it stages a miracle turnaround over the next six weeks, this year will have been by far the group's worst since its flotation in 1988.

Further evidence of the power of a broker's recommendation arose in the course of the same afternoon. Morgan Stanley's Mark Edelstone cut his profit forecast for hi-tech titan Intel.

The maker of the ubiquitous Pentium processors could well find its business under pressure from arch-rival AMD, which has recently put a faster chip on to the market.

Mr Edelstone's note predicted grim times for the whole PC industry, and the doomsaying was more than enough for the already gloomy markets. Intel's stock fell 13 per cent within about half an hour of the news, and took the Nasdaq's losses over the week to more than 12 per cent.

The Dow Jones floundered as well, dropping 231 points by the close.

The news came too late to make much difference to the City, which ended the week almost exactly where it started. Equity movement throughout Monday and Tuesday was heavily dampened as investors sat on their hands during the Chancellor's pre-Budget speech and the US elections. When the market decided that both events were fairly neutral for the City, the focus turned to another heavy week of company results.

Standing out from these was BT, the ungainly telecoms mammoth which last week joined the ranks of Telewest and Invensys as the FT-SE 100's three worst performers this year. In the initial announcement of its disappointing results, the shares tumbled almost 5 per cent. The group described plans to sell a quarter of BT Wireless, the business which includes Cellnet and Yell, the directories and e-commerce side of things.

The strategy is part of BT's attempt to reduce its mighty £10bn pile of debt, though it did nothing to brighten the dim view taken of the group. On Friday, the market chopped a further 6 per cent off the stock, taking it down to the 700p level, and to within spitting distance of its 18-month low.

Colt, BT's rival, fared even worse in trading that followed the group's third-quarter figures. The company has still not recorded a profit, and on this occasion managed to widen its loss. The market was not impressed and wiped 160p off the group's bedraggled share price.

Another former hero forced to take a beating was France's premier supermarket chain Carrefour. The group was one of the so-called "big 10" that carried the French market to its record heights a few months ago, and it is not used to being unpopular with the market. But a marginal slowdown in sales growth was enough to give it a taste of the hard life.

French broker Wargny reduced its recommendation on the stock from "buy" to "reduce", which was enough to persuade traders in Paris to lop nearly 3 per cent off the stock.

That created waves in Madrid, where Carrefour's Spanish business is listed separately. There, traders reacted by selling the stock down by more than 12 per cent.