Net Sector Plods Along as Sycamore Soars

It doesn't get much bigger than this.

Sycamore Networks (SCMR:Nasdaq) has made its much-awaited debut. The networking-equipment company was priced at 38, but opened at 270, up 232 points, or 610.5%. It traded as high as 270 7/8 according to quote machines, but was recently up "only" 160, or 420%, at 198. TSC wrote about the company back in August.

In early afternoon trading, TheStreet.com Internet Sector index was up, but nowhere near as much. It was recently up 6.32, or 0.9%, at 725.28

Net/Tech Indices INDEX CHANGE % VALUE TSC Internet 6.32 +0.9% 725.28 TSC E-Commerce 1.00 +1.1% 102.44 TSC E-Finance 1 2 2/4 +4.9% 58 17/32 Nasdaq 32.87 +1.2% 2834.82

"It's the hottest area of the market; networking stocks have done phenomenally well, especially IPOs," said Ken Fleming, analyst for the (IPOSX)IPO Plus Aftermarket fund. "It's somewhat surprising it opened in the 200s, but you've seen other IPOs open as high as well."

According to Renaissance Capital, which runs its IPO fund, Sycamore Networks specializes in optical networking, or sending data over wavelengths of light. Analysts at Renaissance indicated that currently, network operators must work with electronic networking equipment and constantly convert optical signals into electrical signals and then back again. Sycamore's products enable network operators to avoid this constant conversion and move data throughout the network in the optical medium. The end result, they said, is faster, more manageable networks. Renaissance indicated that Sycamore has only one customer, but it has experienced management, "and the market potential is enormous."

Among other stocks in the news, eBay (EBAY) was down 2 3/4, or 2%, at 145 3/4.

The online auctioneer launched additional regional searches in 57 cities. Ten of the cities have their own home pages. Also, eBay said that it had tested its "hot backup" system today. eBay claims the backup system will allow it to recover from most major hardware and software failures in five minutes to one hour. eBay also said it was implementing a change to make the site safer for traders. It said all new sellers will need to place a credit card or debit card on file with eBay before listing their first item. Existing sellers who have created a seller's account will not be affected by the new requirement.

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For the second time this week, Schwab (SCH) suffered a breakdown in its online trading system. Trading at Charles Schwab, both online and over the automated telephone system, was down sometime before the market opened before backup systems kicked in at around 11:20 a.m. EDT, company spokesman Greg Gable said. The problem is related to systems software, and the company is working with its vendor on solving them, he said. Schwab was down after the market close Thursday for similar problems, Gable said, but Wednesday morning's nearly three-hour outage was unrelated. Schwab is just one of many online brokerages that have discovered in the past few years that keeping trading running on the Internet is not as easy as it sounds. Despite the breakdown, Schwab was up 1 5.8, or 5.5%, at 31 3/16.

-- Caroline Humer

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