Pulse: JDS Uniphase Deal Trips Up Tech; Waiting for Yahoo!'s Number

JDS down 15 1/16 on plans to buy SDL, and Comp dips 42.91. Sycamore Networks continues nice run.
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Today's session contained one large firework and a few other duds, if we can continue with the Fourth of July theme for one more day.

The big

news of the day was

JDS Uniphase's

(JDSU)

plans to buy

SDL

(SDLI)

.

JDS Uniphase will give 3.8 shares of stock for every share of SDL, giving the deal a value of $41 billion before the start of trading today. But with JDS Uniphase closing down 15 1/16, or 13%, at 101 1/8, acquisition value dropped to around $35.7 billion.

Weakness in JDS Uniphase was blamed for losses in the

Nasdaq

today. It finished down 42.91, or 1.07%, to 3980.29.

TheStreet.com Internet Sector

index fell 23.09, or 2.9%, to 784.02.

Much of the Internet sector's direction could depend on

Yahoo!'s

(YHOO)

earnings report tomorrow, though our own George Mannes claims that

numbers from

DoubleClick

(DCLK)

that will be reported next week could be equally as important to Net investors. Both suffered losses today. Yahoo! eneded down 6 1/2, or 5.6%, at 110, while DoubleClick finished off 4 1/4, or 12%, at 31 11/16.

Other duds included

Inktomi

(INKT)

, which finished down 9 5/8, or 8%, at 108 1/2, though without any news behind the losses.

CMGI

(CMGI)

finished down 2 1/4, or 5.5%, at 39.

Among the leading gainers,

Phone.com

(PHCM)

closed up 5 3/4, or 9%, at 68 1/8.

SG Cowen

initiated coverage of the stock with a strong buy rating and a $100 price target. Analyst John Graves wrote that the stock represented the "purest market proxy for high-growth mobile Internet services."

Also,

Sycamore Networks

(SCMR)

, which gained 15% on Friday on news that it had won a contract with

360networks

, was up another 7 7/8, or 6%, at 134 13/16 today.

2:06 P.M.: Analyst Sees Signs of Hope

Sometimes even quiet sessions can tell you something. After early weakness, the Nasdaq was trading near unchanged of late, suggesting potential for a continuation of Friday's rally later today.

In recent trading, the Nasdaq Composite was up 4 to 4027.

TheStreet.com Internet Sector

index was down 9 to 798. What are technical analysts saying? Mostly positive things, though with qualifiers.

Dick Dickson, technical analyst with

Scott & Stringfellow

sees today's price action as profit-taking from Friday's rally, though the path of least resistance remains higher and key resistance areas should be tested. Dickson is more focused on 4150 in the Nasdaq, which is above a trendline he has drawn from the Jan. 7 low of 3711 and the Jan. 31 low of 3748. That trendline held resistance on May 1 and June 27, he said, and comes in somewhere around 4100 at this time, but he would like a clean break to 4150.

Dickson said he thinks it might be a time to gamble on the upside, but with the bigger high tech names. He said that while the Nasdaq and the

Inter@ctive Week Internet Index

are both near breakout levels, both TheStreet.com Internet Sector index and the

Goldman Sachs Internet Index

are nowhere close to breakout levels so strength in the Nasdaq is likely concentrated in the big-cap Internet stocks rather than smaller ones. And, he said, a break of that 4150 level could take the Nasdaq up to 4500 in a hurry. He noted that the Nasdaq went from 4500 to 3800 back in April and expects a move to the upside could be just as fast.

Dickson also said today's price action was positive in that the Nasdaq absorbed the early selling and did not extend losses, suggesting a push higher late in the day. He said he would have liked to have seen more follow-through to Friday's gains, "but you take what you can get in this market."

Robert Dickey, director of technical research with

Dain Rauscher Wessels

, points to the 4064 closing high from June 21 as a level the Nasdaq needs to get above on a closing basis to suggest a more sustained summer rally. A clear break of that level, he says, provides potential to move up an additional 5% to 10% during the next two months.

However (isn't there always a however), Dickey notes that a breakout cannot be counted on with the market having had so many head-fakes of late. Though if it did occur, he said it can be chased, "as it would be a significant change to the neutral range of the recent trend." Finally, he noted that momentum has had a hard time following through without a news catalyst. The market could get this momentum should earnings be as good as expected.

10:32 a.m.: JDS Uniphase Battered on Big Deal; Tech Stocks Languishing

There will be no

headhunting here at

TheStreet.com

, just straight fastballs down the middle so you, the reader, can hit a dinger.

In early action today, the

Nasdaq was down 12, or 0.3%, to 4011.

TheStreet.com Internet Sector

index was off 4, or 0.6%, to 803.

Grabbing many of the headlines was the huge deal involving

JDS Uniphase

(JDSU)

buying

SDL

(SDLI)

. JDS Uniphase, which will give 3.8 shares of stock for every share of SDL, was getting hammered, down 13.2%. SDL was up 9%. Our crack staff at

TheStreet.com/NYTimes.com

joint newsroom took a closer look at the acquisition in an earlier

piece.

Elsewhere, the market was mixed as it moves into earnings season. Among stocks on the move,

BroadVision

(BVSN) - Get Report

, which tumbled 25% on Friday on news that

American Airlines

had selected

Art Technology

(ARTG)

over BroadVision for its next Web site release, was up 6.6% today. Art Technology was off 1.5% after trading to an all-time high of 114 earlier in the session.

Goldman Sachs

, which has done underwriting for BroadVision, said the decline was an "overreaction." Analyst Lilly Bahramipour wrote that while American Airlines represented "a very visible account" for BroadVision, it was not significant from a revenue perspective. She wrote that she expects BroadVision to report good second quarter results on July 20 and that management was expected to make positive announcements, such as customer wins, over the next few weeks that could be a catalyst for the stock.

Goldman also put out a note on

Qualcomm

(QCOM) - Get Report

after Korean wireless operators last week indicated that they were leaning toward using cellular phone technology from

Nokia

(NOK) - Get Report

and

Ericsson

(ERICY)

. Goldman analyst Mary Henry wrote that a decision had not been made yet and even if the other technology was chose there was "no likely impact" on near-term revenue or earnings per share for Qualcomm. She did write that Korea represented a third of Qualcomm's revenues and adoption of competing technology "would create more competition for Qualcomm." Goldman has not done underwriting for Qualcomm. It was up 0.7% in recent trading.

Sycamore Networks

(SCMR)

, which surged around 15% Friday on news that it had won a contract with

360networks

, was up a further 3.8% today.

Donaldson Lufkin & Jenrette

indicated that the deal was positive from a number of perspectives and raised its price target on the stock to 150 from 110. Analyst Hasan Imam wrote that the deal reduced Sycamore Networks' customer concentration, which he said was a major concern for the company in the past. He also wrote that the deal validated Sycamore's next-generation optical product line. DLJ has not done underwriting for Sycamore Networks.