Pulse: Semis Recharged, and Tech Stocks Ride Along
A reversal of fortune for chipmakers helped power a rally in the technology sector this afternoon. Just yesterday, semiconductor stocks were badly beaten after analysts at Salomon Smith Barney downgraded the group.
Today,
Chase H&Q
and
Donaldson Lufkin & Jenrette
came to the rescue. Despite recent share-price losses, the analysts stated that the chipmakers' growth cycle is not over yet. Chase analyst Eric Chen wrote, "Our analysis does not indicate any major issues with slowing semiconductor unit growth and record capital spending."
The
Philadelphia Stock Exchange Semiconductor Index
closed up 48.3, or 4.5%, to 1119.1.
Advanced Micro Devices
(AMD) - Get Advanced Micro Devices, Inc. Report
lifted 2 1/8, or 2.8%, to 77 3/8, while
Intel
(INTC) - Get Intel Corporation Report
boosted 5, or 3.8%, to 136 5/8.
Also on the upside,
TheStreet Recommends
Universal Access
(UAXS)
, a provider of Internet network-infrastructure services, was solidly higher in midday trading.
Goldman Sachs
upgraded the stock to the U.S. Recommended for Purchase List from a previous market outperformer rating. The stock closed up 4 7/8, or 19.9%, to 29 7/16.
The
Nasdaq Composite Index finished ahead 97.47, or 2.52%, to 3960.57.
TheStreet.com Internet Sector
index moved ahead 8.10, or 0.99%, to 825.30.
On the downside, Wall Street business Internet services provider
FirstWorld Communications
(FWIS)
got burned, after stating Wednesday that second-quarter revenue would fall short of analyst expectations. On top of that announcement, the company declared that its president and chief executive, Sheldon Ohringer, had resigned. FirstWorld plunged 5 17/32, or 57.5%, to 4 3/32.
Bear Stearns
,
Deutsche Banc Alex. Brown
, and
PaineWebber
hacked their ratings of the company's stock. According to Bear Stearns' research note, FirstWorld's announcement raises a yellow flag about the company's business and the predictability of its financial results.
Similarily, Bear Stearns,
Goldman Sachs
and
Morgan Stanley
went after
Visual Networks
(VNWK)
, which manages traffic flow for Internet companies, after the company announced that revenue would not meet expectations for the second quarter. Visual Networks expects earnings to be 1 cent per share for the quarter, lower than the five-broker
First Call/Thomson Financial
6 cents consensus. Visual Networks plummeted 14 1/4, or 54.3%, to 12.
2:23: Profit-Warning Techs Pummeled
Two roads diverged from Wall Street this afternoon, and technology shares traveled both. While many tech shares traveled the green, those that warned investors of disappointing profits went the way of the red.
Internet services provider
FirstWorld Communications
(FWIS)
got burned after stating Wednesday that second-quarter revenues would fall short of analyst expectations. On top of that announcement, the company said its president and chief executive, Sheldon Ohringer, had resigned. FirstWorld plunged 5 3/4, or 59.7%, to 3 7/8.
Bear Stearns
,
Deutsche Banc Alex. Brown
and
PaineWebber
hacked their ratings of the company's stock. According to Bear Stearns' research note, FirstWorld's announcement raises a "yellow flag" about the company's business and the predictability of its financial results.
Similarily, Bear Stearns,
Goldman Sachs
and
Morgan Stanley
targeted
Visual Networks
(VNWK)
, downgrading the company that manages traffic flow for Internet companies. The company announced that revenue would not meet expectations for the second quarter. Visual Networks expects earnings to be 1 cent per share for the quarter, lower than the five-analyst
First Call/Thomson Financial
6 cents consensus. This afternoon, Visual Networks plummeted 15, or 57.1%, to 11 1/4. The stock was the
Nasdaq's
third most actively traded name, with 14.6 million shares changing hands.
Radcom
(RDCM) - Get RADCOM Ltd. Report
, a maker of test and analysis equipment for the communications industry, also felt the wrath of Wall Street today. On Wednesday, the company warned that its second-quarter earnings will fall below expectations because of a delay in order approvals for two key customers. The Israel-based company said it would record a loss in the range of 8 cents to 10 cents a share, while analysts had expected the company to lose 1 cent a share. Radcom lost 5/8, or 10.3%, to 5 7/16.
In afternoon trading, the
Nasdaq Composite Index was up 29.4, or 0.76%, to 3892.5.
TheStreet.com Internet Sector
index was off 4.25, or 0.52%, to 812.95.
Chase H & Q
and
Donaldson Lufkin & Jenrette
helped rescue the semiconductor industry today. Despite recent losses, the analysts believe the chipmakers growth cycle is not over yet. Chase analyst Eric Chen wrote, "Our analysis does not indicate any major issues with slowing semiconductor unit growth and record capital spending."
Just yesterday, the sector was beaten down badly after analysts at
Salomon Smith Barney
downgraded the group. Lately, the
Philadelphia Stock Exchange Semiconductor Index
was up 3%.
Advanced Micro Devices
(AMD) - Get Advanced Micro Devices, Inc. Report
lifted 1 11/16, or 2.16%, to 76 7/8, while
Silicon Storage Technology
(SSTI) - Get ShotSpotter, Inc. Report
slumped 3 7/16, or 4.2%, to 80 3/8.
On the upside,
Universal Access
(UAXS)
, a provider of Internet network infrastructure services, was solidly higher in midday trading. The stock was up 3 5/16, or 13.5%, to 27 7/8.
10:36: Tech Continues to Slump; Visual Networks the Day's Big Loser
After suffering through a lousy day yesterday, technology stocks were trying to turn it around this morning, as some money was coming back into the Internet and the battered semiconductor sectors.
Visual Networks
(VNWK)
, which provides service management for Internet companies, was off sharply this morning after announcing that revenue would not meet expectations for the second quarter.
The company expects earnings to be 1 cent per share for the quarter, lower than the five-broker
First Call/Thomson Financial
consensus for 6 cents. The stock was lately down 15 1/16, or 57.4%, to 11 3/16 and was the
Nasdaq Stock Market's most actively traded name, with 11.1 million shares changing hands.
Internet bellwether
Yahoo!
(YHOO)
saw a brief lift out of the gate, but has slumped recently. The shares were off 1/16, or 0.05%, to 120 3/4 out of the gate. Most other well-known Internet names were nearly unchanged in the early going, however.
Exodus Communications
(EXDS)
was a heavily trafficked stock, with 28.5 million shares traded. The stock was lately down 4.4%.
A research report by
Donaldson Lufkin & Jenrette
was viewed as supporting the semiconductor sector today, which was beaten down badly after analysts at
Salomon Smith Barney
downgraded the group yesterday. Lately, the
Philadelphia Stock Exchange Semiconductor Index
was off just 0.1%.
Siebel Systems
(SEBL)
, a provider of e-business application software, was losing ground despite the announcement of a joint venture with
Sprint PCS
(PCS)
. In early trading, the stock was down 0.7%.
Universal Access
(UAXS)
, a provider of Internet network infrastructure services, was solidly higher in early trading. The stock was up 11.5%, making it one of the bigger percentage gainers early in the day.
