Nasdaq Moves Above 2000 As Investors Try to Regroup
A WSJ.COM News Roundup
NEW YORK -- Technology stocks moved into positive territory Tuesday following Monday's beating as investors hunted for bargains among the bruised sector.
The Nasdaq Composite Index added 91.42, or 4.8%, to finish at 2014.80 Tuesday. The Dow Jones Internet Index rose 5.86 to 81.94, while Morgan Stanley's high-tech 35 index climbed 26 to 572.81.
Boasted by chip stocks and networking-gear issues, the Nasdaq staged a partial comeback after plunging Monday to close below the 2000 mark for the first time since December 1998. Investors shook off profit worries and concerns about the sluggish U.S. economy to add stocks of tech stalwarts to their core holdings.
Cisco Systems added $2.56, or 14%, to $21.38 on the Nasdaq Stock Market. Chief Executive John Chambers told analysts in a conference presentation Tuesday that the company hasn't seen a rise in orders in the first six weeks of its fiscal third quarter (see article). Mr. Chambers didn't offer a new outlook for the third quarter, but said he expected a wider range of analysts' estimates for the rest of fiscal 2001 and into fiscal 2002.
Despite Declines, Stocks Remain Expensive in Relation to Earnings
"There's no question -- we got knocked on our tails," Mr. Chambers said of the January slowdown which caused the networking-equipment giant to miss analysts' earnings and revenue estimates for its second quarter ended Jan. 27.
The company's announcement last Friday that it would undertake job cuts helped fuel Monday's selloff, as some analysts interpreted the move as a signal that Cisco will fall short of the revised estimates it offered last month.
Other tech bellwethers including EMC, Oracle, Sun Microsystems and Microsoft also traded higher Tuesday as investors are "clearly focusing on survivors in the future," said Ned Riley, chief investment strategist at State Street Global Advisors.
EMC gained $3.85, or 13%, to $34.09; Oracle rose $1.75, or 12%, to $16.94; Sun added $2.06, or 12%, to $19.13; and Microsoft gained $2.25 to $54.19, all on Nasdaq.
"Cisco's commentary this morning felt much more appropriate," Mr. Riley said. "We heard that the company is focusing on longer term attractiveness of its business and is getting the focus away from the next quarter or two."
Mr. Riley said companies are basically saying "get over the fact that [we] disappointed for a quarter or two and pay attention to what's important in longer term prospects."
Elsewhere, Peregrine Systems added 94 cents to $19.25 on Nasdaq. The maker of infrastructure-management software on Monday agreed to acquire Extricity, a closely held maker of business-to-business software, for $168 million in stock (see article).
Chips, Networking Stocks Help Lift Techs
The Philadelphia Stock Exchange Semiconductor Index added 36.13 to 612.51 as investors picked up shares of downtrodden semiconductor issues, which got caught in the fallout from Intel's revenue warning last week.
An optimistic note from Goldman Sachs helped pump up chip stocks. "We see a bumpy recovery, with a lot of short-term disappointments. But if we are not at the turning point, we are close," Goldman said.
Intel added $1.63 to $29.38 on Nasdaq, Micron Technology rose $3.29 to $44.05 on the New York Stock Exchange. Triquint Semiconductor added $2.31 to $17 and Vitesse Semiconductor gained $4.50 to $44.56.
Integrated Silicon Solution fell earlier in the day to as low as $11.38 but finished the session up 6.3 cents to $12.50 on Nasdaq. The semiconductor maker said it expects to report second-quarter earnings of 28 cents a share to 31 cents a share. Analysts surveyed by First Call/Thomson Financial were looking for the company to earn 47 cents a share. The company estimated revenue will range from $52 million to $54 million.
Sonus Networks shares jumped $4.06, or 19%, to $26 on Nasdaq after the maker of networking gear announced its largest-ever supply contract. Sonus agreed to a multimillion deal to supply Qwest Communications International with next-generation switches. Randy Scherago, an analyst with Prudential Volpe Technology Group, said the multiyear contract should add "at least" $8 million to $10 million in revenue in 2001. Mr. Scherago reiterated his "strong buy" rating and $55 price target for the stock. Qwest rose $1.53 to $34.78 on the New York Stock Exchange.
Avici Systems added $3.63, or 35%, to $13.94 on Nasdaq after Merrill Lynch said the provider of high-speed data networking gear continues to see sustainable demand for its TSR core router. Merrill maintained its "intermediate neutral" rating on the stock, citing uncertainty surrounding service-provider spending.
Telecom-Equipment Outlook Still Cloudy
WJ Communications dropped $1.38, or 31%, to $3.06 on Nasdaq. Citing an overall economic slowdown and weaker demand, the broadband-communication products company lowered its first-quarter estimate to a loss of five cents to seven cents a share, with revenue of $16 million to $19 million. Analysts surveyed by First Call/Thomson Financial were looking for a loss of one cent a share for the first quarter. WJ Communications said it believes the current market conditions could extend into the second half of the year.
O2wireless Solutions tumbled $2.31, or 51%, to $2.25 after the wireless-telecommunications company lowered its first-quarter revenue and earnings expectations due to longer spending lead times amid a challenging economy. The company said it expects overall market growth to slow in 2001. J.P. Morgan cut the stock to "long-term buy" from "buy."
Stanford Microdevices shed $1.81, or 20%, to $7.19. The supplier of telecommunications components lowered its first-quarter outlook, citing continued softness in the wireless infrastructure markets. The company anticipates first-quarter revenue of $7.6 million to $8 million, compared with year-earlier revenue of $7.3 million and the fourth quarter's $10.7 million. The company said its pro forma earnings to be in the break-even range, compared with a penny a share a year earlier.
PSINet fell 25 cents, or 25%, to 75 cents on Nasdaq after the Internet-services company agreed to sell its transaction-solutions unit to an investment group for $300 million, as part of its effort to raise cash (see article). PSINet said that despite the anticipated unit sale and other efforts, it still could default on certain debt obligations.
Novell lost 28 cents to $5.53 on Nasdaq after the networking-software maker said late Monday that it agreed to acquire technology-consulting firm Cambridge Technology Partners for about $255 million in stock (see article). Cambridge Tech added 38 cents to $3.47 on Nasdaq.
Hummingbird fell $4.25, or 15%, to $23.88 on Nasdaq after the software maker issued a second-quarter profit warning late Monday, citing a slowdown in its North American connectivity business.
Razorfish fell 6.3% to 94 cents on Nasdaq after the Internet-services company disclosed it is again reducing its staff just a month after firing about 20% of its workers. Razorfish has offered voluntary buyouts to some employees at its San Francisco, Boston and London offices (see article). Those three offices currently employ 617 of its 1,500 employees |
