Sure, there was some profit-taking going on in the technology sector for the second day in a row, but some of the companies seeing the selling had some issues other than just greed.
ended the day down 121.54, or 2.9%, at 4055.63, dropping through support at 4074 late in the day.
TheStreet.com Internet Sector
index ended down 34.72, or 40%, at 833.06. The tech sector opened on the defensive and never really recovered.
Losses in both
after they released earnings last night contributed to the malaise in the rest of the sector. Microsoft finished down 5 3/8, or 7%, at 73 1/8, while Intel ended down 4 7/8, or 3.4%, at 138 1/8.
Among those stocks that sold off post-earnings was
, which finished down 11 1/4, or 17%, at 55 5/16. Our own
Joe "B2B" Bousquin
suggests that investors may have been
disappointed that Commerce One did not show the hypergrowth like rival
did when it reported earnings last week.
Among the other decliners,
ended off 9, or 15.5%, at 49 despite besting earnings estimates. In a note on the report,
analyst Henry Blodget wrote that RealNetworks could come under pressure "due to management's conservative guidance" for the second half of the year.
also had its problems, closing down 26, or 21%, at 98 1/8. According to one source, contributing to the losses were some comments from
analyst Paul Johnson on Foundry.
In his note on the company, Johnson writes that Foundry failed to reduce the same level of growth in the Layer 4-7 switching market (software-integrated devices) that
did when it preannounced earnings last week. He also said Foundry did not produce the same level of growth in the Internet routing market as
But according to an analyst at another brokerage firm, who asked not to be identified, Foundry introduced a new product in the router market during the quarter. So comparing the revenue for that product with Juniper's was somewhat misleading. In addition, the analyst said that while Alteon's revenue in the switching market grew faster than Foundry's, that part represents only 15% of Foundry's business. The research analyst does not have an underwriting relationship with Foundry.
Elsewhere, a number of companies that were scheduled to report earnings after the close saw profit-taking in advance of the numbers.
closed down 13 1/2, or 10%, at 121 1/2;
ended down 7 5/16, or 15%, at 42 1/2; and
Check Point Software
dropped 25 11/16, or 10%, to 224 7/8.
closed down 2 9/16, or 8%, at 29 5/8 after agreeing to buy
in an all-stock transaction. Ziff-Davis finished up 2 1/16, or 18%, at 13 7/16.
, Ziff-Davis' online tracking stock, closed up 4, or 31%, at 16 7/8.
2:01 P.M.: Profit-Taking Continues, but Some Key Support Levels Have Held
Profit-taking pressures had taken the
near some critical technical levels, suggesting potential for a bounce and rebound if the levels continue to hold.
In recent trading, the Nasdaq was off 79 to 4098.
TheStreet.com Internet Sector
index was down 30 to 838.
Elaine Yager, senior technical analyst and vice president at
Herzog Heine Geduld
, said the Nasdaq had headed toward support at 4074, which was the high from June 22 and the breakout point for the most recent rally. She said there is additional support around 4000, another breakout point.
Yager said there are a tremendous amount of cross-currents impacting the market. While the Nasdaq was able to break out to the upside, she said the
Consumer Price Index report left the market split on whether the
Fed would raise interest rates or not, and profit taking "appears to be the prudent thing" in advance of Fed Chairman
testimony before the
Senate Banking Committee
Yager said she still sees the Nasdaq pushing to 4400 or 4500 as long as the support levels hold. The risk, she said, was that summer rallies tend to fade during the latter party of July and the better seasonal/cyclical picture for stock indices is the beginning to middle of the fourth quarter.
Among those names getting batted around today,
was down 16.9%;
was down 11.7% and
was down 13%.
And traders weren't even waiting around to see the numbers before getting out of other issues.
which is scheduled to report tonight, was down 11.9%. And
, which also reports tonight, was down 11%.
Check Point Software
, another company that was reporting after the close was down as well.
was seeing some minor selling in advance of its report, down 3.5%.
One bright spot in the sector came from a company that went public in the midst of today's profit-taking session.
, which, as its name suggests, provides online technical support, was up 154.9%.
10:46 a.m. EDT: Tech Slump Continues as Earnings Aren't Quite Good Enough
A plethora of earnings reports and a high-profile merger were moving some technology stocks this morning, but profit-taking continued to keep pressure on the sector.
The Nasdaq was down 36, or 0.9%, to 4141 in early trading. TheStreet.com Internet Sector index, the DOT, was off 19, or 2.2%, to 849.
Among companies that reported last night,
was down 10.2%. The company reported a second-quarter loss of 10 cents a share vs. the 13-cent loss estimate from
First Call/Thomson Financial
But note that the stock had rallied since
posted stellar earnings last week and was likely just seeing a bit of sell-the-fact profit-taking. Our own
Joe "B2B" Bousquin
takes a detailed look at the numbers in a piece that ran last night.
Also in the B2B space,
was down 2.2%. It reported earnings of 10 cents a share vs. the 8-cent estimate.
And Internet infrastructure play
was floundering, down 14.9% after reporting a 19-cent profit vs. the 16-cent estimate. It too had rallied strongly into its numbers.
Among more traditional plays,
was down 5.5% after reporting last night. The online advertising company reported a loss of 3 cents a share for its second quarter vs. the 5-cent loss estimate.
downgraded DoubleClick to buy from strong buy today due to "diminished near-term revenue outlook." Analyst David Doft also lowered his price target to the mid-50s from 120. Doft did indicate that the second-quarter results "were actually quite solid," and continued to hold an optimistic view of the company longer term.
U.S. Bancorp Piper Jaffray
also downgraded DoubleClick, to neutral from buy. Analyst Safa Rashtchy said that uncertainty over Internet advertising over the next several quarters may pressure the stock, though he looked for a possible recovery in the fourth quarter. He lowered both fiscal 2000 and 2001 earnings per share and revenue estimates as well.
was off 12.3% after posting better-than-expected results last night. The streaming media company reported a profit of 6 cents, which was above the 5-cent consensus. It, too, had rallied into its numbers, hence a bit of profit-taking despite what was seen as a solid report.
Other than earnings, the biggest news in the sector was
purchase of rival
in an all-stock deal valued at $1.6 billion. CNet was down 10.5% on the news, while Ziff-Davis was up 14.8%, and
, Ziff-Davis' online tracking stock, was up 25.2%.
Under terms of the agreement, each share of ZD common stock will be converted into 0.3397 shares of CNet's common stock and each share of ZDNet will be converted into 0.5932 shares of CNet common. CNet will issue about 50 million shares to cover the transaction.