Traders blamed the fall on fears that computer-related companies were overvalued and on prospects of further interest rate rises. The companies which suffered the biggest losses in share value included Intel, Cisco and Microsoft.
One analyst said, “No one wants to commit to technology because every time they do they are getting their fingers blown off.”
In the UK, the low value of the high profile LastMinute.com and the collapses of Boo.com last week and subsequetly Net Imperative have contributed to a nervousness about internet company shares. The ramification for a small business could be that it becomes more difficult to find funding.
Egg, the internet banking arm of Prudential, the UK insurance company, has postponed its initial public offering, following a fall in UK technology shares in the UK.
Prudential had planned today to issue an indicative price range for the shares. However, Goldman Sachs, the advisers, decided it was impossible to set the price given the current volatility of the market for technology shares. “You couldn’t choose a worse week to float,” said one Egg adviser.
Prudential’s announcement follows Yes TV, the UK video on demand company, aborting on Saturday its plans to float for £560 million.