Techs hurt by chip selloff; IBM breaks $200

SAN FRANCISCO (MarketWatch) � A sharp selloff in the semiconductor sector kept most tech stocks mired in the red by Monday�s closing bell, though IBM managed one of the few bright spots in the group by crossing to a new high.

/quotes/zigman/230066/quotes/nls/ibm IBM 194.45, -0.73, -0.37% /quotes/zigman/3870025 SPX 1,365.00, -10.14, -0.74%

The Nasdaq Composite Index COMP �closed down 0.9% to 2,950 and the Morgan Stanley High-Tech Index MSH shed about 1%. The Dow was off by about 15 points.

IBM IBM �was a bright spot, closing up nearly 1% at $200.66. It was the first time Big Blue�s shares crossed the $200 mark, on a split-adjusted basis, according to data from FactSet Research.

Chip stocks were down notably, with the Philadelphia Semiconductor Index SOX �off more than 2.5% by the close. Before the opening bell, the Semiconductor Industry Association announced that global chip sales fell 2.7% in January compared to the prior month. Sector leaders Intel INTC �, Advanced Micro Devices AMD �and Nvidia NVDA �all lost ground by the end of the session.

�While there appears to be very little debate that the semi cycle is in a bottoming process, there is much discussion among investors as to the strength (�snap back� vs. seasonal) of the semiconductor industry�s recovery,� wrote Betsy Van Hees of Wedbush in a note to clients Monday.

Zynga ZNGA �skidded nearly 5% to close at $13.97, having gained nearly 12% over the previous two sessions as the company announced coming beta trials for an online platform that would allow users to play its games outside of Facebook, which hosts the bulk of the company�s game offerings.

In a note to clients, J.P. Morgan analyst Doug Anmuth lowered his rating to neutral, citing the fact that Zynga had reached his $15 price target.

�We attribute the recent move to increased investor focus on social gaming, the potential for legalization of online gambling, and optimism in the soon-to-be launched Zynga platform,� he wrote. �We are also positive on these fronts, but we believe some of the potential upside is now being factored into the stock and it will likely take some time for both online gambling and Zynga.com traction to materialize.�

Click to Play Yahoo CEO Preps for Layoffs

Yahoo's CEO Scott Thompson is preparing a massive restructuring of the company, including layoffs that are likely to number in the thousands. Photo: AP.

Videogame publisher Activision Blizzard ATVI made a mild gain in the afternoon after announcing a new CFO. The company named Dennis Durkin, who formerly served as CFO to Microsoft�s MSFT �Xbox unit, to the post. �

Also Monday, Apple Inc. AAPL � shares were down about 2.2% to $533.16 after a fractional gain earlier. The company reported that downloads from its App Store passed the 25 billion mark. The company is also expected to unveil its newest iPad at an event in San Francisco on Wednesday.

Computer Sciences Corp. CSC �rose nearly 2% after the company signed a non-binding letter of intent with the U.K. Department of Health to deliver technology services to the agency.

Yahoo YHOO �shares were down about 0.7% following a report on the AllThingsD blog that new CEO Scott Thompson is preparing �a massive restructuring� of the Web pioneer that will include a large number of layoffs. The report cited unnamed sources �both inside and outside� of Yahoo. Read AllThingsD post on Yahoo.

Yelp YELP �shares were down nearly 15% to close at $20.99 on their second day of trading following the IPO. The stock surged more than 60% on Friday after the online review site placed 7.15 million shares at $15 per share.

Among large-cap tech plays, the top decliners were Hewlett-Packard HPQ �, eBay EBAY �and Google GOOG ��. Software makers Oracle ORCL �and SAP SAP �managed some modest gains.