Oracle's Earnings Power Past Estimates in After-Hours Report

SAN FRANCISCO -- After the close, software maker Oracle (ORCL Quote) reported earnings of $527 million, or 36 cents a share, for its fiscal fourth quarter, up from 27 cents reported last year. Analysts surveyed by First Call expected earnings of 32 cents a share. Sales rose 22% to $2.9 billion. Ahead of the report, Oracle stock closed down 1 5/16, or 5%, at 25 1/8.

It was a mostly positive day for the technology sector and beleaguered Internet stocks, though price action certainly indicated a lack of conviction.

The Nasdaq closed up around 16 points, while TheStreet.com Internet Sector index finished up 1.95, or 0.4%, at 504.08 after reaching a high of 513.25 earlier in the session. There may have been some trepidation ahead of Wednesday's Consumer Price Index report for May as strength seen in the April report helped spook the market.

Texas Instruments Merrill Lynch upped the price target on Texas Instruments to 155 today, but the stock hasn't needed much help lately. TI has gone from around 105 at the start of the month to 134 11/16 today, up 5 7/16, or 4%. It is a big reason why the Philadelphia Stock Exchange Semiconductor Index is at record highs.

Jim Herrick, managing director of trading with Robert W. Baird, said there was some bargain hunting going on in the Internet sector and maybe a little short-covering. But Herrick said he still was seeing pessimism, suggesting a bottom has not been made.

"We haven't had that day of capitulation. It's been more of a slow trickle," he said.

Herrick's comments about a big down day echo those made by Robert Dickey, director of technical research for Dain Rauscher Wessels on Monday. And while Dickey bases his comments on technical analysis, Herrick said he's been around long enough to know that selloffs like the ones the Net sector is experiencing usually end ugly.

eBay (EBAY Quote) stabilized following Monday's 30-point selloff, though it was unable to hold gains made early in the session. The online auctioneer closed down 1/2, or 0.4%, at 135 1/2, roughly midway between its session low of 126 11/16 and the session high of 143.

Some Net stocks may have gotten a boost from a report by the Nielsen Media Research/NetRatings group, which showed Internet usage bounced back in May from April. The report showed traffic to the top 10 sites increased by 8.7% in May versus April. Internet stocks sold off sharply in May after a report from Media Metrix indicated that Internet usage had slowed during April. The Nielsen numbers for May also showed a small decline in usage, but the market showed a stronger reaction to the Media Metrix report.

America Online's (AOL Quote) Web sites had the most visitors, according to Nielsen, followed by Yahoo! (YHOO Quote), Microsoft's (MSFT Quote) MSN and Lycos (LCOS Quote).

AOL closed up 4 3/16, or 5%, at 94 11/16. In addition to the Nielsen report, there also was news that AOL had purchased a 10% stake in China.com, a Hong-Kong based Web site operator. Yahoo! ended up 6, or 5%, at 125 1/4 and Lycos closed up 6 3/16, or 9%, at 76 1/4. Microsoft closed up 1/8 at 77 11/16.

Also among Net stocks, Inktomi (INKT Quote) closed up 5 3/4, or 7%, at 90 1/2 after unveiling new search engine technology.

And Youbet.com (UBET Quote) lost almost 30% of its value after the company announced a secondary offering of around 3.5 million shares at $14 a share. It closed down 5 1/4, or 29%, at 12 5/8. The stock began trading on the Nasdaq today.

Communication chip companies closed firm after Merrill Lynch upped its price targets on seven stocks. Top gainers included Broadcom (BRCM Quote), up 9 5/8, or 9.5%, at 110 5/8 and Texas Instruments (TXN Quote), up 5 7/16, or 4%, at 134 11/16.

Latest Bounce in Net Stocks? Not falling for another head fake. Selloff over, great chance to buy. Any recovery is a shorting opportunity. No longer playing Net game.