Earnings Spark Sharp Tech Rebound
New York, Jul 12, 2001 (123Jump via COMTEX) -- Tech stocks hung onto an early
gap higher Thursday, as investors snapped up beaten-down issues.
The Nasdaq Composite Index hurdled back over the psychologically important 2000
level, surging 83.80, or 4.2%, to 2055.84. The big-cap Nasdaq-100 Index climbed
85.97, or 5.2%, to 1727.53.
At noon, market internals on Nasdaq showed the number of advancing issues more
than doubling decliners and up-volume accounting for roughly 85% of trading.
Among the most-actively traded issues today:
Networking giant Cisco Systems (CSCO) added 87 cents, or more than 5%, to 17.57.
Software titan Microsoft (MSFT) jumped 4.39, or nearly 7%, to 70.89.
Semiconductor giant Intel (INTC) rallied 1.62, or nearly 6%, to 29.68.
Networking-computer maker Sun Microsystems (SUNW) rose 91 cents, or 6.5%, to
14.89.
Microsoft was key to today's rally, as the tech bellwether pre-announced 3%
higher-than-expected fiscal fourth-quarter revenues - between $6.5 billion and
$6.6 billion - and forecast operations would fall in line with expectations.
Wall Street's consensus earnings estimate was 42 cents per share.
However, the company said it would record $2.6 billion in investment losses,
dragging its bottom line down to a penny per share.
In addition, Microsoft announced yesterday plans to change its licensing
agreements with computer makers and allow them to remove Microsoft icons from
products using its Windows operating system and add those from other technology
companies, such as RealNetworks (RNWK) or AOL Time Warner (AOL).
Previous licensing agreements prohibited manufacturers from changing the desktop
in any way. The move comes in response to a recent court ruling that confirmed
Microsoft's competitive practices broke antitrust laws.
Software makers Oracle (ORCL), SAP (SAP), Siebel Systems (SEBL), PeopleSoft
(PSFT), TIBCO Software (TIBX), BEA Systems (BEAS) and Vignette (VIGN) also
posted impressive gains.
In the chip sector, the closely watched Philadelphia Semiconductor Index surged
35.53, or 6.4%, to 593.50, with components Teradyne (TER), Texas Instruments
(TXN), Linear Technology (LLTC) and Advanced Micro Devices (AMD) recording 9%
advances.
Communications chip makers posted even sharper rallies. Vitesse Semiconductor
(VTSS) jumped 2.76, or 17%, to 18.87; TriQuint Semiconductor (TQNT) surged 3.13,
or more than 18%, to 3.13; PMC-Sierra (PMCS) rallied 3.11, or more than 12%, to
28.60 and TranSwitch (TXCC) climbed 96 cents, or 12%, to 8.96.
Cisco's gains came after the networker announced its first acquisition of the
year - a purchase of networking chip designer AuroraNetics for about $150
million in stock.
The networking sector powered ahead following encouraging earnings reports from
Redback Networks (RBAK) and Sonus Networks (SONS). CIENA (CIEN), Lucent
Technologies (LU), JDS Uniphase (JDSU) and ONI Systems (ONIS) all rose sharply
in the wake.
Earnings Reports
Shares of Redback edged up 19 cents, or 3%, to 6.72, after the company checked
in late yesterday with a second-quarter pro-forma loss of $37 million, or 26
cents per share, excluding charges - ahead of the analysts' consensus loss
estimate of 29 cents per share.
Quarterly revenue for the company was $59.4 million, up from $48.7 million a
year ago.
Shares of Sonus surged 3.71, or nearly 20%, to 22.64, after the phone-network
equipment maker posted a second-quarter profit of $1.2 million, or a penny per
share, excluding items - bettering the Street's expectation of a break-even
result.
Second-quarter revenue grew 27% year-over-year to $52.6 million.
Separately, Sonus signed BellSouth (BLS) to a deal that Prudential estimates
will translate into $3 million to $5 million in revenue for the fourth quarter.
Shares of Internet media giant Yahoo! (YHOO) climbed 1.11, or more than 6%, to
18.14, after the company reported better-than-expected sales of $182.2 million,
versus $175.1 million, and reiterated earnings guidance for the third quarter
and fiscal 2001.
Yahoo!'s bottom line for the quarter was a profit of $8.7 million, or a penny
per share, versus a break-even result anticipated by the Street.
As a group, the 50-stock Amex Internet Index jumped 9.06, or 5.5%, to 173.90,
led by Inktomi (INKT), up 11.33, or more than 19%, to 8.18, and Ariba (ARBA), up
73 cents, or 15%, to 5.65.
Motorola (MOT), chip maker and the No. 2 supplier of mobile phones, reported a
second-quarter loss of $232 million, or 11 cents per diluted share, excluding
special items, compared with a year-ago profit of $551 million, or 25 cents per
share. Analysts had a consensus loss estimate of 12 cents per share.
Revenue for the quarter dropped 19% to $7.5 billion - well below Wall Street's
sales estimate of $8.3 billion - the company blamed the shortfall on weakness in
the telecom and semiconductor industries.
Shares of Motorola surged 2.18, or 14%, to 17.85, on hopes that its handset
business has stabilized and that earnings have bottomed.
Handset rivals Nokia (NOK) and LM Ericsson (ERICY) posted modest gains, despite
the possibility of Motorola growing its market share.
:=) Gary Swancey
AI
