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Technology stocks quake in wake of Nasdaq slump

By Aimee McClinchy

Friday 14th April 2000

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Fledgling local technology stocks were slammed this week as the Nasdaq slid three days in a row, suffering its second worst drop ever on Wednesday.

Advantage Group closed at $4.30, down 37c, with the company losing 7.9% of its value. Its shares bottomed out at $4.20 yesterday.

Even technology-related stocks such as Telecom and Sky Network Television felt the effect.

The Nasdaq fell 5.8% on Monday and 3.2% on Tuesday, but a 7.05% drop on Wednesday was felt worldwide and brought the blue-chip Dow Jones industrial average down 200 points in less than an hour.

Some US traders had not been worried about the Nasdaq's month-long pullback, even after the tremendous fall last week. But as the tech-driven gauge continued to fall, market players expressed concern.

"If it goes lower, well, I don't want to know what's next," one trader said.

Analysts said the movements showed the market was trying to "sort out the good stocks from the hype."

Yesterday afternoon Strathmore Group was at 32c, down 3c on the previous day, IT Capital at 44c, down 6c, and Beauty Direct at 15c, down 3c.

Telecom shares were trading at $9.20, down 20c, and Sky at $4.45, down 25 cents.

ABN Amro analyst Jeremy Simpson said the market was going through a "bit of a shakedown" with tech companies exposed because they were aggressively priced.

Simon Botherway from Arcus Investment Managers, formerly Spicers, said further falls could be expected as the market looked closely at the companies.

"We will see a divergence of performance between those who have strong long-term prospects and those who don't.

"There has been a real goldrush mentality and people have just climbed on the box. You've got to look at the quality of the management and the long-term prospects.

"The music has stopped and it's time to find a seat."

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