The Night Watch: IBM Feels Big-Time Blue; Intel Inside the Winner's Circle

(Updated from 7:55 p.m. EDT)

As earnings announcements flooded the after-hours marketplace, nighttime investors rocked and rumbled.

Stocks in the postclose spotlight tonight were IBM (IBM) and Intel (INTC).

With 769,393 shares changing hands on Instinet, IBM dropped $13, or 11.5%, to $100.

After the closing bell, Big Blue reported third-quarter earnings in line with Wall Street's estimates. IBM posted a profit of $1.08 a share, up from the year-ago 90-cent result. But the company reported revenue of $21.8 billion, at the low end of analysts' expectations. (TSC discussed IBM's earnings in a separate story.)

The after-hours reaction to Intel (INTC), which also announced third-quarter earnings this evening, was different. Tonight's most active stock initially hopped $1.85 to $38.0625. The chipmaker later retreated from that level, ending up 38 cents, or 1%, to $36.56 on both Island ECN and Instinet.

Intel posted a profit of 41 cents a share, topping Wall Street's reduced target of 38-cent earnings and improving upon the year-ago 27-cent result.

Less than a month ago, the semiconductor manufacturer cautioned investors that third-quarter revenue would come in below analysts' expectations, due to weak demand in Europe. Nonetheless, the company's earnings matched Wall Street's initial forecast of 41 cents, which was lowered when Intel warned of a revenue shortfall.

Third-quarter revenue came in at $8.73 billion, compared with $7.32 billion in the year-ago period. On Sept. 21, Intel forecast that revenue would be about $8.5 billion to $8.7 billion. Before the company issued a profit warning, many analysts had predicted that Intel would report revenue of about $9 billion. (TheStreet.com/NYTimes.com joint newsroom covered Intel's earnings announcement in a separate story.)

Intel's shares ended regular trading Tuesday up 50 cents, or 1%, at $36.19. The chipmaker's stock is down 52% from its 52-week high of $75.81, reached on Aug. 28, with much of that decline coming from a sharp selloff after the company warned in September of the weaker revenue. The semi stock closed the regular session up 50 cents, or 1%, to $36.19, well off the 52-week high of $75.81 it reached Aug. 28.

This morning, Morgan Stanley Dean Witter and PaineWebber cut their ratings on Micron Technology (MU), sending the stock down $4.69, or 13.9%, to $29 and the Philadelphia Stock Exchange Semiconductor Index lower 66.84, or 9.4%, to 648.09.

Fellow semi stock Applied Materials (AMAT), downgraded today by Credit Suisse First Boston, fell $1, or 2.2%, to $44 in after-hours Island action.

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In other earnings news, DSL provider Copper Mountain Networks (CMTN) issued third-quarter results that beat estimates, but the company said that fourth-quarter and 2001 earnings would come in below estimates, due to decreased demand. That news hit Copper Mountain hard in extended trading. The stock collapsed $14.26, or 53%, to $12.61 on Island and plummeted $14.63, or 54.4%, to $12.25 on Instinet.

A profit warning from RF Micro Devices (RFMD), a circuit manufacturer, knocked its stock down $7.36, or 32%, to $15.64 on Island and took it lower $7.50, or 32.6%, to $15.50. Tonight, the company said that lower-than-expected order activity in the second quarter would take a bite out of revenue for the third quarter.

Shares of Covad Communications (COVD) staggered $2.84, or 33.1%, to $5.75 on Instinet and decreased $2.72, or 31.69%, to $5.87 on Instinet. Tonight, the high-speed Internet access provider recorded a loss of $1.22 a share, wider than the analyst estimate of a $1.19 loss and below the year-ago negative 47-cent result.

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On the heels of today's technology selloff, Nasdaq Composite Index finished down 76.3 to 3213.9. The Dow Jones Industrial Average Index ended off 149 to 10,089.

What does tonight's activity suggest about tomorrow? Lately, the S&P 500 futures on Globex were down 0.56 to 1354.2, about 7 points below fair value as calculated by Prudential Securities, and indicating some negative sentiment for tomorrow's open. The thinly traded Nasdaq 100 futures were down 15 to 3155, about 51 points below fair value as calculated by TheStreet.com, and showing downward pressure for the Nasdaq's start.

10 most active stocks on Instinet (6:30 p.m. EDT)
Company	Price	Change	Session Volume
Intel (INTC)	36.5625	+0.375	2,444,842
Copper Mountain Networks (CMTN)	12.25	-14.625	841,040
IBM (IBM)	100	-13	769,393
Nasdaq 100 (QQQ)	78	-0.25	681,500
RF Micro Devices (RFMD)	15.625	-7.375	573,375
Nokia (NOK)	31	+0.3125	491,900
Ericsson (ERICY)	13.953125	-0.234375	345,143
Sun Microsystems (SUNW)	109.3125	-2.0625	279,803
America Online (AOL)	43.80	0.1999999	271,446
Alcan Aluminum (AL)	30.875	-0.125	226,835

10 most active stocks on Island ECN (8 p.m. EDT)
Company	Price	Change	Session Volume
Intel (INTC)	36.5625	+0.375	1,631,249
Copper Mountain Networks (CMTN)	12.6172	-14.2578	1,299,766
RF Micro Devices (RFMD)	15.50	-7.50	271,612
Covad Communications (COVD)	5.87	-2.7238	217,138
i2 Technologies (ITWO)	175	-5.0625	86,720
BroadVision (BVSN)	25.25	-0.8125	86,395
RealNetworks (RNWK)	17.75	-3.9375	51,685
Novellus Systems (NVLS)	31.25	-0.4375	48,726
Applied Materials (AMAT)	44	-1	43,003
Sun Microsystems (SUNW)	108.75	-2.625	39,495

Island ECN, owned by Datek Online, offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EDT.

Confused? TheStreet.com explains how the rules change when the sun goes down in Investing Basics: Night Owl, a section devoted to after-hours trading.

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