Sun Shares Fall as Concerns Over Tech Stocks Heats Up

Sun Microsystems Inc. shares fell 12% amid concern that it might be the next technology company to warn of disappointing profits, joining such bellwethers as Intel Corp. and Compaq Computer Corp.

The maker of workstations and computer servers fell $4.97 to close at $37.78 in Nasdaq trading. It was Sun’s biggest one-day drop in almost four years.

Already, Intel, Compaq and Motorola Inc., three of technology’s largest companies, have said first-quarter profit will lag forecasts, hurt by weak demand and, in Motorola’s case, the Asian economic crisis. That’s raised concern that a parade of tech companies bearing bad news is on the way.

“Everybody’s on the witch hunt for who’s next, and Sun was on people’s list,” said analyst David Wu at ABN Amro Chicago Corp., who has a 12-month price target on Sun of $60 a share and rates the stock “strong buy.” “If Compaq can disappoint primarily in the U.S., they think it can happen to Sun.”

Intel’s forecast last week for lower-than-expected earnings roiled tech stocks, and they declined again today after Compaq made its troubles known.

The Nasdaq Composite Index, packed with computer, semiconductor and software companies, fell 1.6% Monday after falling 1% last week. The Standard & Poor’s Computer Systems Index has tumbled 11% since Feb. 27.

Some analysts said they don’t expect Sun to drop because its bread-and-butter products--powerful servers that run computer networks--don’t serve exactly the same markets as Compaq, Intel’s largest customer.

“They said U.S. and European business is very strong. . . . So far, there are no signs of trouble,” Wu said.