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Pulse: Rosy-Cheeked Tech Stocks Bring Cheer to Investors

Investors were pinching the cheeks of their tech darlings today as illustrated by the

Nasdaq's

7.8% jump. The third-largest percentage and point gain ever was the result of infectious bargain hunting after some grim and volatile beatings this month.

The Nasdaq closed at 3418.60, gaining 247.04, or 7.79%. In fact, the Nasdaq has settled higher only three times this month, including last Friday's second-largest percentage gain.

TheStreet.com's Internet Sector Index

was a winner today for a change, up 8.75%. All the DOT's components ended in the green with the exception of

America Online

(AOL)

, which reported solid first-quarter results last night.

AOL's profits doubled to $340 million, or 14 cents a share from 7 cents a year ago, and advertising and commerce revenue came in in line with most analyst estimates, climbing 80% to $649 million.

Worries about a slowing online advertising market have ravaged the DOT lately, and despite AOL's positive financial results, some investors and analysts focused on the Internet company's flat advertising backlog. As a result, AOL fell 3%.

Analysts from

J.P. Morgan

and

Lehman Brothers

voiced concerns about the impact of a flat ad/commerce backlog and falling deferred revenue on AOL's future. It may have been that uncertainty that pressured the stock today.

J.P. Morgan's Susan White did add in a research note that AOL will be attractive to own once the dust of its merger and the advertising concerns settle.

Other analysts upgraded AOL based on the combination of cheap price and growth potential.

"Shares of America Online and merger partner

Time Warner

(TWX)

have retreated 27% since Oct. 5, prompting us to raise the rating on the shares to accumulate. Concerns over a potential slowdown in the advertising market has brought these stocks down to more attractive buying levels, as we believe the market has discounted these concerns," wrote analysts at

AG Edwards

.

3:51 p.m.: Texas Instruments Takes Texas-Sized Jump

Want to jump on the cell phone bandwagon?

Texas Instruments

(TXN) - Get Report

was cleaning up today on the latest portable telecommunications mania. Texas Instruments, which makes chips used in cell phones, popped 22.9% after giving an upbeat outlook for chip demand next year.

The company last night announced that

third-quarter profits rose 69% and said it is completing new factories to increase manufacturing capacity.

It's percentage gain today is almost tie with mobile phone company

Nokia

(NOK) - Get Report

. It jumped 28.3% after it reported that its third-quarter earnings rose 42% over a year ago, beating analysts expectations.

Was Nokia excited to share

its news ? The Finnish company moved its earnings release up a week. Nokia said it predicts record profits in the fourth-quarter and said it expects to meet its 25% to 30% sales growth target.

Scandinavian competitor

Ericsson

(ERICY)

was also higher, rising 6.5%.

Qualcomm

TheStreet Recommends

(QCOM) - Get Report

and

Vodafone

(VOD) - Get Report

jumped on the rally train, rising 1.8% and 8.2% respectively.

Chipmaker

Intel

(INTC) - Get Report

rose 10%.

So it shouldn't come as a surprise to see that the

Philadelphia Semiconductor Index

, commonly called the SOX, rose a sassy 16%. Even the suffering

TheStreet.com Internet Sector

index, known as the

DOT , was 8.4% in the green.

Redemption for the broader market (one day after the wild gyrations on the

Dow and

Nasdaq) came in the form of

Microsoft

(MSFT) - Get Report

and

Sun Microsystems

(SUNW) - Get Report

.

A bit of good earnings news from these bellweather tech companies, along with Texas Instruments and Nokia, led investors to forgive, forget and buy greedily.

Microsoft rose 19.3% as the most-active stock on the Nasdaq. The world's largest software maker said fiscal

first-quarter profits rose to 46 cents a share, beating by 12 percent the average estimate of analysts surveyed by

First Call/Thomson Financial

. The company cited strong sales of Windows 2000 and investment income.

Sun Microsystems, one of the biggest makers of computers that power Internet sites and corporate networks, reported fiscal first-quarter profits that

beat estimates by 15 percent, earnings that rose 88% and sales that were 60% better.

ABN AMRO

raised its rating to buy from outperform and lifted its 12-month price target to $150 from $140 for the company.

Bear Stearns

lifted its 2001 earnings estimate to $1.40 per share from $1.35 and raised its 2002 outlook to $1.85 from $1.60. Sun was shining $6.69 higher to $117.

RealNetworks

(RNWK) - Get Report

was bruised from yesterday¿s

fall on its disappointing quarterly results, but was up 16.8% today after announcing that

IBM

(IBM) - Get Report

would offer RealNetworks' audio and video to users of UNIX-based business computers.