TECH STOCKS: Apple Leads Tech Selloff; Microsoft Gains

By Rex Crum and Dan Gallagher, MarketWatch

SAN FRANCISCO (MarketWatch) -- Tech stocks started the week on a largely dismal note Monday. Wide selling started early and led to a day of disappointment with most of the group closing in the red and Apple Inc. leading the drop.

Apple (AAPL) ended the day with a loss of almost $11 a share, or 2.7%, to close at $402.54 after falling below the $400 mark earlier in the day for the first time in two months.

Before the start of trading, Jefferies & Co. analyst Peter Misek cut his price target on Apple's stock to $405 a share from $420. In a research note, Misek also lowered his iPhone sales estimate for the third quarter of the year to 27 million units from 30 million.

"We remain cautious on Apple as it fills in its product gap" with what Misek estimates will be a 5-inch screen iPhone 6 next year. Misek also said that checks in the smartphone industry indicate longer inventory levels for mobile-network carriers, suggesting that products are sitting on the shelves longer than anticipated.

With Apple leading the decline, the Nasdaq Composite Index (RIXF) fell more than 36 points, or 1%, to close at 3,320, while the Philadelphia Semiconductor Index (SOX) gave up 2% and the Morgan Stanley High-Tech Index (MSH) fell 1.5%. The Dow also fell by almost 140 points, to close at 14,659 -- after having shed more than 240 points earlier, as investors registered fears about a possible liquidity crunch in China.

Microsoft (MSFT) was one of the few gainers, rising 1.4% to close at $33.72. The software giant will kick off its Build developers conference in San Francisco on Wednesday, where it is expected to preview its coming Windows Blue update.

But most other major tech stocks closed in the red. Google Inc. (GOOG) fell 1.3%, to close at $869.79, even though J.P. Morgan analyst Doug Anmuth raised his price target on the company's stock to $1,025 a share from $860 on overall positive sentiment for the company's business efforts.

Dell (DELL) shares shed a penny each to close at $13.34. The PC maker argued in a filing on Monday morning that a counterproposal led by activist Carl Icahn "lacked credibility" and is risky.

Yahoo (YHOO) fell by 4.5%, to $24.07. The company will hold its annual shareholder meeting on Tuesday morning. Facebook (FB) closed with a loss of 2.4% at. $23.93.

Among other leading tech stocks, Intel Corp. (INTC) and EMC Corp. (EMC) each gave up 2.5%; and Hewlett-Packard Co. (HPQ) ended the day down by 3%.

One bright spot was Stec Inc.(STEC), which saw its shares almost double, to close at $6.71, after hard disk-drive maker Western Digital Corp. (WDC) said it would acquire the maker of solid state drives for $340 million, or the equivalent of $6.85 a share.

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