Tech Earnings On Deck, Looking Ugly (AAPL)(GOOG)(MSFT)(INTC)(SAP)

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Intel (INTC) said it loved its past and hated its future. The Age of Romance must be over. These sentiments are supposed to be the other way around.

The world’s largest chip company said third quarter earnings were up 12%. But Intel CEO Paul Otellini said in a call with analysts that the financial crisis is "creating some signs of stress that may impact our business."

Microsoft’s Steve Ballmer made similar comments two weeks ago. Since he is usually in high spirits, that is an especially bad sign.

In the tech world, the funereal atmosphere is almost everywhere. SAP (SAP), the world’s No.2 enterprise software company, said it would miss its numbers. Analysts have begun talking down Google’s (GOOG) prospects. New Gartner figures show that PC sales growth in the last quarter was only 4.6% in the US. It also appears that sales of cellphones are leveling out which would hurt several handset makers and the companies that supply them chips.

Fools with their silly dreams believed, at least until now, that company IT departments could not do without the latest four-processor chips and virtualization software. Perhaps that is why VMWare (VMW) is down from a 52-week high of $125 to $21.

Even Apple (AAPL) is not immune. It cut the price on its least expensive Mac notebook to $999. A retail trick just like the one that works in the used car industry.

Tech sold off after the furious rally that drove US shares up 11% on Monday. Tech took the markets down more than any other sector. The faithful were driven out of the temples of hardware, software, and e-commerce.

If investors want to see how much the carnage has spread, they only need to look to third quarter earnings at Microsoft (MSFT) and Google. They represent the life of online and IT spending in a tea cup. If both falter when they make their forecasts for the fourth quarter and next year, the correction in technology stocks will become a a full-fledged massacre.That will do the broader market no favors.

If tech is the sector which was to be the belt and suspenders for stocks, the pants are about to drop.

Douglas A. McIntyre