The Night Watch: Oracle Tonight's Whipping Boy After Issuing Another Warning

(Updated from 6:23 p.m. EST)

Investors may have been forgiving in the final hour trading, but they are merciless after the closing bell.

On Wall Street's hit list tonight is Oracle (ORCL Quote). The enterprise software manufacturer plunged 21% to $16.89 on Instinet and tanked 21.1% to $16.88 on Island ECN, after warning that fiscal third-quarter earnings would fall below consensus estimates.

For the usual reasons, a slowdown in the U.S. economy and reduced information technology spending, Oracle projects third-quarter earnings of 10 cents a share, 2 cents ahead of its year-ago result but 2 pennies shy of Wall Street's estimate. The company also trimmed earnings forecasts for upcoming quarters by an undisclosed amount. For its fiscal fourth quarter, Oracle is expected to post earnings of 20 cents a share.

The software maker expects applications revenue to grow 50% for the third quarter, well below its previous 75% growth target. Oracle has aimed to boost applications revenue by 50% to 100% in fiscal 2001. The company said that it expects database revenue growth to be flat to slightly negative for the year, compared to previous projections of a 15% to 20% gain only two weeks ago.

Aftershocks from Oracle's blast were lately being felt by businesses that service other businesses with software: the B2B sector. Ariba (ARBA Quote) decreased 7% to $15.88 on Instinet, while i2 Technologies (ITWO Quote) lowered 7.5% to $25.50 on the platform.

Other software names were also down on the fallout. On Instinet, BEA Systems (BEAS Quote) shed 8.1% to $35.75, Veritas Software (VRTS Quote) slid 8% to $65 and Siebel Systems (SEBL Quote) lost 14.3% to $38.25.

In recent Night Watch action, traders had virtually torn apart any vestiges of strength in technology stocks. After dropping to a level last seen in December 1998, the Nasdaq Composite Index finished up 32 points to 2183, with gains in semiconductor, networking, PC manufacturer and Internet stocks.

Tonight, bad news crippled components on the technology-laden index.

Earlier this evening, Dow Jones Industrial Average component SBC Communications (SBC Quote) warned that it expects earnings for its fiscal first quarter to fall below Wall Street's expectations, sending its stock down 5.5% to $43 on Instinet.

Citing costs associated with the launch of new services, the telecommunications service provider said it predicts earnings to fall between 50 cents a share to 53 cents a share, below Wall Street's forecast of 59 cents a share and the year-ago 56 cents a share profit. SBC anticipates earnings in excess of 60 cents a share for each of the remaining three quarters of 2001. Analysts are calling for the company to earn 62 cents a share in the second quarter, 64 cents a share in the third quarter and 69 cents a share in the fourth quarter.

Among retail stocks, Gap (GPS Quote) fell 12.8% to $23.75 on Instinet, after the company reported fourth-quarter earnings that beat Wall Street's reduced estimates by a penny, but lowered guidance for its first quarter and said that the retail environment remains challenging.

10 most active stocks on Instinet (6:30 p.m. EST)
Company	Price	Change	Session Volume
Oracle (ORCL Quote)	17.13	-4.25	2,191,752
Nasdaq 100 (QQQ Quote)	47.80	-1	542,450
Winstar Communications (WCII Quote)	12.50	--	489,000
Cisco (CSCO Quote)	23.50	-1	482,489
Siebel Systems (SEBL Quote)	37	-7.63	450,560
Microsoft (MSFT Quote)	58	-1.36	442,661
SBC Communications (SBC Quote)	43	-2.50	400,040
Intel (INTC Quote)	28.14	-0.98	314,728
Xircom (XIRC Quote)	24.89	-1.02	309,700
Veritas (VRTS Quote)	64.98	-5.70	270,600

This information is provided by Instinet, a wholly owned subsidiary of Reuters (RTRSY Quote). For further information, please contact Instinet at www.instinet.com.

10 most active stocks on Island ECN (7 p.m. EST)
Company	Price	Change	Session Volume
Oracle (ORCL Quote)	16.88	-4.50	1,550,506
Nasdaq 100 (QQQ Quote)	47.86	n.a.	286,587
Cisco (CSCO Quote)	23.56	-0.94	186,337
JDS Uniphase (JDSU Quote)	27.78	-1.47	183,988
Siebel Systems (SEBL Quote)	38.25	-6.38	176,457
Xircom (XIRC Quote)	24.88	+1	116,750
Applied Micro Circuits (AMCC Quote)	28.88	-0.69	107,904
Juniper Networks (JNPR Quote)	60.13	-1.69	99,058
Sun Microsystems (SUNW Quote)	19.13	-0.94	98,453
Ariba (ARBA Quote)	15.94	-1.13	97,833

Island ECN offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EST.

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.