EXTR--CORRECTED - U.S. stocks fall, Microsoft offers hope after-hours
In Oct. 18 NEW YORK item headlined ``CORRECTED-U.S. stocks fall, Microsoft offers hope after-hours'' please read in 12th paragraph ... The stock fell after the company reported first-quarter earnings of 8 cents per share, beating analysts' estimates of 6 cents per share ... instead of ... 4 cents per share, falling short of analysts' estimates ... (corrects figure and shows the company exceeded estimates rather than fell below them).
A corrected repetition follows.
(Updates with earnings released after the bell and after-hours stock prices, plus analyst comments)
By Emma-Kate Symons
NEW YORK, Oct 18 (Reuters) - U.S. stocks on Wednesday first spiraled to year lows and the Dow Jones industrial average crashed below the psychologically important 10,000 barrier, but solid earnings from leading software maker Microsoft after hours gave some hope the markets may reclaim some losses on Thursday.
``The earnings are being viewed by the market in the after-market as favourable,'' said Dan Ascani, president and director of research at Global Market Strategists Inc, Gainesville, Ga.
``We ought to see a favourable reaction to them tomorrow but there's some general concern among about whether the market has bottomed -- everyone seems to be fixated on this and institutions will selectively pick stocks.''
But Ascani said ``it's hard to say'' whether the Dow will stay above the critical 10,000 mark, because of lingering worries about future earnings.
The Dow Jones industrial average (^DJI - news) in the morning plummeted 438 points, its biggest intraday drop since April 14, to a 19-month low of 9,651.68.
But the Dow ended at 9,975.02, down 114.69 points, or 1.14 percent. That was the first time the Dow has closed below the crucial 10,000 level since mid-March.
The Nasdaq Composite Index (^IXIC - news) first fell almost 6 percent, or close to 200 points, early in the day to a new year low of 3,026.11.
But the technology-rich Nasdaq partially rebounded and ended down just 42.40 points, or 1.32 percent, at 3,171.56, based on the latest available figures. The Nasdaq got a lift from the strength of Sun Microsystems (NasdaqNM:SUNW - news) and telecom giant WorldCom Inc. (NasdaqNM:WCOM - news).
The broader Standard & Poor's 500 Index (^SPX - news), ended down 7.84 points, or 0.58 percent, at 1,342.13.
In brisk after-hours trading dominated by profit reports from prominent technology companies, Microsoft saw its shares surge more than 6 percent, to $54-7/8 on the Instinet brokerage system. Microsoft rose after the release of better-than-expected earnings, and bullish comments about its key product Windows 2000.
After the close of regular trading, Nasdaq 100 futures were up 55 points, to 3,210.00, reversing an earlier drop of 15 points. The Dow industrials futures were off 97 points, at 10,043, and the S&P 500 futures rose 7.40 points, to 1,360.20.
Extreme Networks Inc. (NasdaqNM:EXTR - news), which makes computer networking equipment, was battered after-hours, falling to $96-1/4 on Instinet, from its regular close at $107-1/8. The stock fell after the company reported first-quarter earnings of 8 cents per share, beating analysts' estimates of 6 cents per share, according to research firm First Call/Thomson Financial.
Microsoft reported after the bell that its first-quarter net profit in its fiscal first quarter ended Sept. 30 rose 18 percent to $2.58 billion, or 46 cents per share, before including an accounting change. This was up from $2.19 billion, or 40 cents per share, a year earlier. The results topped analysts' expectations of 41 cents per share, according to research firm First Call/Thomson Financial.
The stock of America Online (NYSE:AOL - news), the No. 1 Internet services provider, slipped slightly on Instinet, to $45-1/2, from a regular close of $46.91. The modest drop came after the company posted first-quarter earnings that doubled from a year earlier as subscriber, advertising and e-commerce revenues drove growth.
The shares of Nokia Corp. (NYSE:NOK - news) were up $2, at $32 after the bell, following the surprise news the world's largest mobile phone maker would post third-quarter results on Thursday -- a week ahead of plan.
Texas Instruments Inc. (NYSE:TXN - news), the leading maker of computer chips for mobile phones, said after the bell its third-quarter net income rose 31 percent, pushing shares up modestly to $37-13/16 on Instinet.
The shares of Broadcom Corp. (NasdaqNM:BRCM - news), a high-speed communications semiconductor maker, also rose to $215 after-hours, up from a regular close of $209-3/8. The shares spiked after the company reported better-than-expected third-quarter earnings.
E-business software maker Ariba Inc. (NasdaqNM:ARBA - news) saw its shares tumble after it reported a fourth-quarter net loss of $1.1 million, or nil per share, compared with a net loss of $4.6 million, or 3 cents per share, a year earlier. Ariba last traded on Instinet at $117-3/4, down from a standard close of $127-1/16.
Investors, who this year have stomached extreme price swings, in the morning looked into the abyss. Stocks were in a freefall, led by an 18-point drop in the shares of computing
titan International Business Machines Corp.(NYSE:IBM - news).
``It was a gut-wrenching opening, but a lot of investors hoped that this represented capitulation lows,'' said Arnold Berman, technology strategist at Wit SoundView.
Disappointing sales growth at IBM reignited fears of slowing corporate profit growth; new data showed higher-than-expected inflation at the consumer price level; the euro, the single European currency whose weakness has hurt U.S. companies' exports, hit yet another low, and mutual fund managers sold money-losing shares to offset tax liability on gains realised earlier in the year.
Tech stocks got a boost when Sun, a leading maker of computers that serve up Web pages, inadvertently posted strong quarterly results on its Web site ahead of a scheduled release of its earnings after the close of regular trading.
``I just want the day to end,'' said a Charles Schwab customer looking at stock quotes at the discount brokerage's Wall Street office during his lunch hour. ``But I might consider it a buying opportunity tomorrow and add to my positions.''
Other investors already started to act on that idea Wednesday afternoon, and the market started to recover some of its earlier losses.
``It's not fun, but we continue to look for good companies that are on sale,'' said Irene O'Neill, a fund manager with Evergreen Asset Management, which helps to oversee $80 billion in assets. ``Dow 10,000 is a broad negative for the market, but the fundamentals are more important.''
IBM's drop weighed heavily on the Dow, as did a sharp drop in the stock of commercial and investment bank J.P. Morgan & Co. Inc. (NYSE:JPM - news) |
