Some former highfliers that were grounded during November's anti-tech carnage were flying again today, lifted by the
Fueled by the speculation that the
may soon have a new position on interest rates and that the nation might finally get a president, the market was inclined toward generosity on tech stocks. It was especially kind to some that a few weeks ago were eyeballed for overly high valuations.
shares had lost 47% of their value since the first week of November. Much of that was due to worries over storage industry giant
new product, which was set to compete at the lower end of the attached appliance market, which Network App dominated.
The new product, dubbed Clariion, was unveiled today to positive reviews. "Not surprisingly, EMC reiterated its goal of taking the top spot in the NAS (network attached storage) market from Network Appliance by next year -- and we agree," wrote
analyst Bill Shope. Analyst David Bailey of
Gerard Klauer Mattison
wrote that EMC's new product would provide "formidable opposition" to Network App.
But it doesn't mean the end of Network Appliance, wrote
analyst Tom Kraemer, just more competition in a market that will be more than $7 billion in 2003. He estimated that Network App could continue to grow 100% year over year for the next few years.
With the competition worries already priced into the stock, Network Applications closed up $16.75, or 29.4%, to $74.42.
EMC, which had dropped a comparatively light 16% since the first week in November, closed up 11.8%.
The cheer spread to another pricey group. Optical components also climbed today.
New Focus on Networks
were among the highest risers. New Focus had an ugly November, like most tech stocks. Investor concerns about overly high valuations were compounded by a lockup expiration Nov. 13 that released 44 million shares onto the market.
New Focus shares ended up losing 58.5% of their value since Nov. 6. They got a chunk of that lost value back today, closing up $9.69. or 42%, to $32.97. Avanex, which lost 51.2% of its value between Nov. 6 and today's rally, closed up $18.06, or 35.1%, to $69.44.
Even some of last year's highfliers -- the Internet stocks -- got to join. Online auctioneer
closed up $7.19, or 22.2%, to $39.50. One catalyst might have been the online auction site's recent agreement with
to post upwards of one million home listings, said
analyst Kent Silverman.
2:30 p.m. ET: Rising Tech Tide Lifts Most Boats
Get a glimpse of who our next president might be, listen to a little upbeat Greenspan-speak and what have you got? A spirited tech rally.
All the major tech indices were moving up today in recent trading. Despite
bad news last week and
announcement yesterday, the
Philadelphia Stock Exchange Semiconductor Index
was soaring, up 8.1%. The
Philadelphia Stock Exchange Computer Box Makers Index
, rocked last week by bottoming PC sales and Gateway's disappointing news, was lately up 5.9%. Even
TheStreet.com Internet Sector
, recently the bad neighborhood for tech stocks, was rising 7.2% today.
It's not just the good news -- the recent bad news contributed to today's rise. Investors have already priced in much of the bad news about tech stocks.
That was proving true with
, which yesterday reduced its growth estimates of 12% for the quarter to 5% to 7%. Shares of the programmable logic device maker moved down 16% after
similar announcement last week, then started moving back up. Xilinx, whose financial projections were cut today by analysts, was trading up $2.32, or 5.5%, to $44. Fellow specialty chipmaker Altera was trading up recently $2.25, or 8.2%, to $29.75
Along with the election coming closer to closure yesterday, the reassuring words from Greenspan today and the earnings report reality checks of the last couple months, there may be another factor in today's tech rise, said Doug Myers, vice president of equity trading for
. Myers has noticed a trend among individual investors who dumped losers in November for tax-loss purposes to buy back some of their favorites, betting that they will be going up again soon.
"They bought in February and felt like fools," Myers said. "Now they think it might be safe to get back in the water."
, which closed down 5.5% Monday despite an aggressively upbeat pitch to analysts, was recently trading up $3.82, or 8.3%, to $49.42.
It wasn't all tea and crumpets for tech stocks.
, which pre-announced yesterday that its results for the second quarter of 2001 would fall short of revenue and earnings estimates, was paying the price today.
Gerard Klauer Mattison
analyst Michael Critinziano downgraded 3Com to outperform from buy and pushed back by six months his estimate of when the company would have positive earnings per share; he now projects this will not occur before the second quarter of fiscal 2002.
3Com was trading down $3.97, or 29.7%, to $9.39, a decline of slightly more than 50% in the last two months.
And a downgrade today by
kept video game maker
trading evenly or very slightly down. EA, North America's largest independent game maker, is also the primary supplier of games for the much-sought-after Sony PlayStation 2. Shortages of the highly anticipated game console got EA downgraded last week, and the stock has dropped 16.3% in value. In recent trading, EA was down 25 cents, or 0.7%, to $37.33. (
wrote about the downgrade in a
wasn't joining in the party, either. A note from
analyst Holly Becker said it was too soon to gauge Amazon's fourth-quarter performance. The stock was trading down 68 cents, or 2.6%, to $25.88.
Some stocks simply shook off bad news. Semiconductor equipment maker
, which had its rating downgraded to add from buy, and its target price reduced by
, was trading up recently 7.1%.
And communications chip stocks, which have seen their world rocked since Cisco announced higher-than-expected inventories in November, were doing well after comments by
analyst John Barton. Neither Barton nor other analysts expect the ongoing inventory correction to simply fade away. The balance of opinion seems to be that it will last through the first quarter of the coming year.
"I don't think it's going to be dramatic, but the Ciscos of the world have to buy less to balance out their inventory," said Karl Motey, analyst with
CE Unterberg Towbin.
Even though they are affected by the correction, communications chip makers
may meet or even exceed their quarter expectations, Barton wrote.
PMC-Sierra, which had dropped 34.9% since Nov. 6, and Vitesse Semiconductor, which dropped 38.7% during the same period, were trading up after Barton wrote they could meet or beat estimates for the quarter. PMC Sierra was trading up 19.9%, and Vitesse was up 7.1%.