IBM warning hits tech sector

Shares in top technology companies fell sharply after IBM warned that its first-quarter results would fall far short of Wall Street forecasts, with revenue nearly $1 billion short of the lowest estimate.

"This IBM thing is absolutely the icing on the cake in terms of people's disappointment with anything related to technology," said John Gillette, senior equities trader at Lazard Freres in New York.

IBM shares closed down over 10 percent on the New York Stock Exchange after their first profits warning in over a decade. Other companies hardest hit were key IBM suppliers Celestica and Sanmina-SCI, both of whom act as contract manufacturers on behalf of IBM.

IBM's warning that corporate customers were deferring new technology spending decisions dragged down three top names in the business services sector - EDS, Accenture and Computer Sciences.