Chip stocks extend rally as H-P slides
By Martin Cej, CBS.MarketWatch.com
Last Update: 5:15 PM ET Aug 17, 2000
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NEW YORK (CBS.MW) -- Chip stocks soared for a fifth day, helping
the Nasdaq close above 3,900 for the first time in more than three weeks.
Hewlett-Packard slumped as investors reassessed its quarterly earnings.
The Nasdaq
Composite Index
($COMPQ: news,
msgs) rose 79.70
points, or 2.1
percent, to
3,940.90, notching
its fifth straight
advance. The
Philadelphia
Semiconductor Index ($SOX: news, msgs) added another 3.5 percent,
bringing its own five-day rally to 18 percent.
The Goldman Sachs Hardware Index ($GHA: news, msgs), which
includes Hewlett-Packard, rose 3 percent as gains by Apple and Dell and
others countered Hewlett-Packard's slide.
Chip stocks again paced the market as investors snapped up shares in
companies they think will be best able to churn out profits even as the
economy cools.
"The Fed's series of rate hikes will not slow down profit growth for the
right companies in this sector, the ones involved in the Internet and
telecom build-out," said Bruce Lupatkin, general partner at fund manager
North Bay Technology Partners. "Will the rally continue? Yes."
Among the chip
stocks, Intel (INTC:
news, msgs)
appeared to reassert
its leadership,
breaking above 70
for the first time in
three weeks. The
chipmaker rose 2 to
70 1/16 and did so
with some authority. Some 39 million shares changed hands, making it the
most active stock on the Nasdaq market. About 36 million Intel shares
are typically traded daily.
Credit Suisse First Boston lifted its earnings outlook on Intel ahead of the
chipmaker's developer forum next week in San Jose, Calif. Attendees will
include hardware and Web developers, system and network architects,
engineers and other interested parties.
Applied Materials (AMAT: news, msgs) rose 3 1/16 to a three-week high
of 84, and Micron Technology (MU: news, msgs) gained 1 11/16 to 89
15/16, its highest close in a month. A full 14 of the Philly chip index's 16
constituents notched gains.
Hewlett-Packard (HWP: news, msgs) shares
dropped 1 3/4 to 108 from their official NYSE
close after soaring in after-hours trading
Wednesday. The company said adjusted earnings
from operations jumped 37 percent to $1.05
billion, or 97 cents a share, from 71 cents, or $853
million, a year earlier. Analysts expected earnings
of 85 cents, according to First Call.
Some investors and analysts questioned
Hewlett-Packard's accounting methods and how
much a lower tax rate may have affected earnings,
while others perused revenue more carefully in the
light of day. See full story.
Revenue in the United States rose 13 percent to
$5.3 billion. In Europe, revenue was $3.8 billion,
up 8 percent, after currency adjustments. Asia
Pacific revenue shot up 36 percent to $1.8 billion.
In Latin America, revenue spiked 27 percent to
$600 million.
Banc of America Securities lowered its rating on the company to "buy"
from "strong buy." Analyst Kurt King said revenue was slightly below
expectations. The brokerage maintained it $140 target on the stock.
Analysts at Prudential lowered their target on the stock to $125 from
$133.
"Hewlett-Packard ran up after the close when it looked like it had a
substantial overachievement in earnings," Lupatkin said. "Now, after
closer examination, it looks like a less substantial overachievement."
Ciena (CIEN: news, msgs) said third-quarter
earnings soared to 19 cents a share, topping
estimates by 2 cents. The company earned 1 cent
last year. The stock, which is a component of
Merrill Lynch's Internet Architecture Holdrs (IAH:
news, msgs), climbed 15 15/16 to 179 3/16.
Brocade Communications also exceeded expectations by 2 cents after the
close Wednesday. The company said third-quarter earnings per share
rose to 16 cents from a penny a year ago. Net revenue for the quarter
rose 360 percent to $92.1 million. The stock (BRCD: news, msgs)
climbed 15 3/16 to 211 15/16. Goldman Sachs raised its 2000 earnings
estimate on the company to 54 cents a share from 46 cents and 2001
earnings to $1.05 a share from 80 cents.
Novell (NOVL: news, msgs) dropped 31/32 to 9 31/32, a 9 percent
decline. The software maker said third-quarter earnings per share plunged
to 3 cents from 14 cents a year ago. Still, the results bettered the First
Call average of analyst estimates by 1 cent.
Quarterly revenue came in at $270 million, down from $327 million in the
year-ago period. The company said packaged software sales were
weaker than expected, especially in the European market.
A pair of Internet brokerages were helped by analysts at Deutsche Banc
Alex. Brown, who gave Ameritrade (AMTD: news, msgs) and Charles
Schwab (SCH: news, msgs) "buy" ratings in new coverage. They were
less ebullient on E-Trade (EGRP: news, msgs) and pegged the stock with
a "market perform" rating. Ameritrade rose 3/8 to 14 15/16, Schwab
added 5/16 to 38 13/16 and E-Trade gained 1 3/8 to 17 1/16.
Sina.com (SINA: news, msgs) shares soared 3 3/4 to 20 3/4 after the
Chinese-language Internet portal launched its career center Web site
Wednesday as part of its North American site. The current job categories
are in finance, Internet, IT and retail in the United States and Asia.
Among other major technology indexes, the Amex Networking Index
($NWX: news, msgs) rose 4.1 percent and the Goldman Sachs Internet
Index ($GIN: news, msgs) jumped 1.3 percent. See Net Stocks. |
