Two publicly traded Web sites announced their closures Tuesday, and rumors swirled that another large site was about to die. Another downer day in the Web space?
Not really --
The Street.com's Internet Sector Index
closed up more than 2%. As for
, the company rumored to be closing a large business-to-consumer site -- its shares were up sharply, closing more than 13% higher to $23.67.
For some of the Web's better-known names it was a good day, with investors reacting well to the idea of sharpening focus and showing some limited optimism in big names.
The CMGI rise came after published rumors that it would close entertainment site
. Both iCast Vice President Stuart Zakim and a CMGI public relations representative denied any substance to the rumors, first published by
But it boosted the perception that CMGI was willing to drop operations that weren't focused on its core mission and that interfered with profitability. The holding company, owner of
, has focused efforts on selling services and support to Web sites and businesses.
"It's a signal that the market is receptive to anything the company is doing to become more profitable and to make its operations leaner," said Michael Agarwala, director of equity research at
. (The firm does no investment banking.)
A short time later, Web site
-- yes, the site of the sock puppet mascot -- and vitamin-seller
announced that they would be shutting down operations.
But investors showed confidence in some of the bigger names.
closed up more than 13%, and
rose more than 4% to close at $56.67. And it has only been a week since the end of tax-loss selling season, when fund managers cut investors' tax bills by dumping losing stocks.
"The October tech wreck is over. It's November," said Adam Holiber, vice president of research at
Morgan Wedbush Securities
. (His firm has no underwriting relationship with RealNetworks.) "These are leading companies that are going to be leading the Internet."
2:55 p.m. EST: Chips Take a Beating After Cisco's Report
The dainty sneeze in
report yesterday meant that a good many chip stocks caught cold today.
Cisco reported that its inventory stockpile for communications chips rose 59% over last quarter -- enough proof for many that there will be slowdown in demand for chips. That was affecting semiconductor stocks, especially the high-speed and programmable logic devices favored by communication networkers.
, a maker of high-speed electronics chips, dropped nearly 17% after
downgraded the stock from strong buy to buy, citing inventory concerns and the company's strong relationship with Cisco.
Analyst Jim Liang said inventory numbers at both Cisco and
have confirmed concerns that the big networking companies have put away more components to ensure supply in the coming year.
Cisco accounts for 17% of Broadcom's revenue, and "it is unlikely that Broadcom could go unscathed in the event of an inventory correction from Cisco," Liang wrote.
Other chipmakers suffered today. The
Philadelphia Stock Exchange Semiconductor Index
was trading down more than 5% this afternoon.
was down more than 16.6% and
, was down more than 14.6% after a
note this morning remarked on their possible exposure to Cisco's inventory issues.
Also suffering: the makers of programmable logic devices, the system on a chip that networkers favor for controlling data traffic. Liang reiterated a hold on
, two of the sector's big players. Similar oversupply concerns caused Altera's shares to drop 20% last week. Altera was trading down more than 10.8%; Xilinx was down more than 10.8%.
Cisco's shares, down this morning, were up more than 3% in the afternoon after
Morgan Stanley Dean Witter
reiterated a strong buy on the stock, noting that the inventory stockpile would allow the company to cut delivery times to customers.
On the other side of the semiconductor street, DRAM maker
was up nearly 5% after it was upgraded to the recommended list by
. DRAM provides instant memory for PCs and other devices.
Micron had been suffering lately because of a sluggish DRAM market and lower prices. But analyst Joe Moore wrote that the market will work for Micron, predicting that PC makers will use more of the cheaper DRAM in their boxes.