Techs Proved Wrecks Rallies Fizzled In 2001 But while earnings won't come close to estimates, some stocks up for year.(INTERNET & TECHNOLOGY)

Byline: JED GRAHAM

To think that 2001 began on such a promising note.

Starting on Jan. 3, tech investors, buoyed by the Federal Reserve's surprise 50 basis-point interest-rate cut, drove the Nasdaq up 600 points over three weeks, convinced that the long tech nightmare was finally over.

But that rally, like a later one in April, was premature. By February, it became clear that Alan Greenspan couldn't ride to the Nasdaq's rescue, as blue chip tech firms stunned investors with one earnings warning after another.

Just how wrong was Wall Street? At the start of 2001, analysts had no thought of recession and expected the earnings of S&P 500 tech companies to rise a respectable 11%, says Chuck Hill, director of research at Thomson Financial/First Call. Now they expect the final total to show a 62% earnings slide, he says.

Seldom This Wrong

"It's shocking in the sense that we know analysts tend to be behind the curve, but they aren't usually that far off," Hill said. Those results won't even include the billions of dollars in one-time charges for laid-off workers, shuttered factories and worthless inventory, he adds.