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December 30, 2005


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InterDigital Communications,
Redwood Trust Drop

By MOHAMMED HADI
DOW JONES NEWSWIRES
December 30, 2005; Page C3

Small stocks outperformed large companies in a fairly broad decline yesterday, though a strong showing by the transportation sector helped keep losses limited.

Overall, the Russell 2000 Index lost 2.12 points, or 0.3%, to 677.96, and the Standard & Poor's SmallCap 600 Index fell 0.87, or 0.3%, to 353.25. The Nasdaq Composite Index of large and small stocks fell 10.78, or 0.5%, to 2218.16.


Gains among transportation stocks were wide-ranging, encompassing trucking and package-delivery companies, shipping lines and airlines. For example, Kansas City, Mo., trucking company SCS Transportation rose 28 cents, or 1.3%, to $21.88, while Orlando, Fla., airline AirTran Holdings (NYSE) gained 31 cents, or 2%, to 16.05. Stamford, Conn., tanker company OMI added 25 cents, or 1.4%, to 18.40, also on the NYSE, and Houston freight company EGL gained 40 cents, or 1.1%, to 37.91.

On the flip side, semiconductor stocks were among the session's worst performing stocks. Among these, InterDigital Communications gave back some of its 12% gain on Wednesday by falling 1.04, or 5.3%, to 18.59; ESS Technology slipped 9 cents, or 2.7%, to 3.25; and Amkor Technology lost 21 cents, or 3.6%, to 5.63.

Trading was light, and market watchers cautioned against reading too much into the moves.

"It appears that virtually anybody who invests money is skiing or in the sun," said Ned Riley, chief investment officer of Riley Asset Management.

Mr. Riley thinks the first week of the new year, by comparison, will be far more active -- but not just because of a return of traders and fund managers.

Instead, he noted that with earnings season approaching it is time for corporations to start preannouncing results. Often these announcements are warnings that results will fall short of earlier forecasts or Wall Street's expectations.


Because of low trading volume this week, though, Mr. Riley thinks it would be a mistake for companies to preannounce bad news, as the lack of liquidity in the market might exaggerate a stock decline in the aftermath of an earnings warning. That means preannouncements will end up squeezed into a fewer number of days in the new year.

Real-estate investment trusts continued to fare poorly. Among small stocks, Washington Real Estate Investment Trust fell 53 cents, or 1.7%, to 30.91; Novastar Financial lost 50 cents, or 1.7%, to 28.35; and Redwood Trust slipped 55 cents, or 1.3%, to 41.70, all on the NYSE.

Multi-Fineline Electronix jumped 8.98, or 23%, to 47.66. The Anaheim, Calif., circuit maker boosted its first-quarter earnings estimate, citing strong holiday sales of wireless devices. Supertex of Sunnyvale, Calif., which also makes parts for wireless phones, rose 3.97, or 9.5%, to 45.81.

Kona Grill fell 44 cents, or 5%, to 8.31, after the Scottsdale, Ariz., company lowered its fiscal 2006 revenue targets and widened its loss estimate for the year, citing delays in opening new restaurants and weak performance of a restaurant in Texas.

Innovative Solutions & Support jumped 88 cents, or 7.5%, to 12.68. The Exton, Pa., maker of flight-information computers and displays said it will repurchase up to two million shares of its common stock over the next six months.

Luby's rose 1.04, or 8.7%, to 13.01 on the Big Board. The Houston cafeteria chain reported better-than-expected first-quarter results.

Write to Mohammed Hadi at [e-mail]1

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