Analysts now lowering projections for more than just tech stocks

NEW YORK -- Wall Street is giving more than just technology stocks a hard time these days.

With a string of analysts' downgrades of stocks in other sectors this past week, it's clear that investment firms that for months have focused on high-tech issues are now re-examining a broad range of stocks.

Blame the more bearish market, analysts say.

"These other industries are just catching up to the prospect of an economic slowdown," said Larry Rice, chief investment officer at Josephthal & Co.

Analysts cited two other key reasons for why they're broadening the range of companies being hit with lowered projections.

First, consumers and investors, increasingly wary about the economy, are becoming more careful in their spending. Also, as technology firms have been battered by investors, a spillover effect has taken other sectors down as well.

So as the Street lowers projections for pricey high-tech stocks as it just did for chip maker Intel and network equipment maker Juniper Networks, it sees softer sales and earnings promising to plague practically everything else.

The ripple effect that's hurt non-tech companies has a lot to do with how quickly dot-com firms have entered and left the marketplace, analysts say.

While industries like advertising benefited from the dot-com surge, they now are suffering as companies like Pets.com go under or as others shrink their budgets for commercials, print ads and Internet consultants.

The dot-com bust has led to downgrades for media companies like News Corp. and Disney -- both of which suffered ratings cuts by Morgan Stanely Dean Witter -- that will see less revenue as ad sales slump.

"If you take a look last year's Super Bowl, we had a whole bunch of dot-com ads, didn't we?," said Jim Myers, director of technical research for Janney Montgomery Scott in Philadelphia.

"Well, where are those guys going to be this year? Not advertising."

Other companies getting pinched by techs are those that grew out of the Internet age.

Consider MarchFirst, also downgraded this past week. The company that started this year provides services, such as Web design, consulting and advertising, to businesses that want to boost their online presence. But with fewer Internet companies around now and perhaps fewer starting up, MarchFirst's client base has shrunk.

Meanwhile, all companies are contending with consumers and investors who feel less confident and less like they have the money to spend at shopping malls or on Wall Street.

"The consumers of this world can't be feeling too wealthy or happy right now," Myers said.

"I think the stock market is adjusting to a deteriorating outlook."

Department stores like J.C. Penney have seen their sales and profits slump.

Even The Gap, a longtime leader of specialty retailing, has struggled.

The latest sign of softening in the retail world came this past week from the well-respected Neiman Marcus. The tony department store company warned that November sales were sluggish and that it expected sales declines for the month to be in the mid-to-high single digits.

Its stock fell more than 16 percent Tuesday after ING Barings downgraded its rating to "hold" from "buy."

Who can blame consumers and investors for closing their wallets, Myers said. Evidence pointing to a slowing economy continues to pile up.

But the Federal Reserve Board earlier this month maintained its position that inflation still threatens the economy. That reawakened investors to the possibility of higher interest rates in a slowing economy that would further crimp corporate profits.

"Everybody is very apprehensive," Myers said.

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