Updated from 12:01 p.m.

Nortel Networks

(NT)

sang a sad song about future earnings last night, and now it's facing the music from some of Wall Street's biggest brokerages. Most analysts have made downgrades and revisions while attempting to figure out how big the repercussions will be.

Merrill Lynch

analyst Tom Astle cut the company's intermediate-term rating to accumulate from buy, while dropping the 2001 earnings per share forecast to 74 cents from 95 cents. The revenue for 2001 is now expected to be lower as well, forecast at $33 billion from $39 billion. The company was also dropped from Merrill's Techfolio and replaced by

Extreme Networks

(EXTR) - Get Report

.

Meanwhile,

Lehman Brothers

cut its price target to $26 from $50 and its 2001 earnings per share estimate to 72 cents from 97 cents.

Credit Suisse First Boston

dropped the company to buy from strong buy and cut its price target to $40 from $80. Additionally, it snipped its 2001 earnings per share forecast to 65 cents from 95 cents and its 2002 forecast to 85 cents from $1.15.

Goldman Sachs

lowered its 2001 earnings per share forecast to 70 cents from 98 cents.

"We thought Q1 would be ugly, but this is worse than we thought," Merrill's Astle wrote. "This sector has turned ugly fast. We had sensed sectoral weakness in

the first quarter but we did not expect Nortel to see this much weakness and lack of visibility."

But Astle didn't stop there. The Nortel warning has enormous repercussions across the board, with customers, rivals and suppliers. The Merrill analyst said that the Nortel news reaffirms their already cautious view of the networking equipment sector, especially in the wake of the

Cisco

(CSCO) - Get Report

warning from last week and the utter lack of visibility in most sectors.

"Clearly, or maybe not so clearly, no one's crystal ball is working these days," Astle wrote, surveying the Nortel fallout.

He said that

JDS Uniphase

(JDSU)

might experience some short-term stock weakness, but that its ties to

Ciena

(CIEN) - Get Report

, which unlike Nortel, announced that business would improve in 2001, could offset the losses from its sales to Nortel.

Exfo

(EXFO) - Get Report

and

Avanex

(AVNX)

are both in a similar situation, with Nortel representing a 10% chunk of business that may or may not be offset somewhere else. It's worth noting that Exfo has yet to warn, while Avanex was cautious in its comments.

But if you're looking for one company that could get killed by the news, then look no further than

Corning

(GLW) - Get Report

. Fellow Merrill analyst Steven Fox lowered his estimates on Corning, cutting both 2001 earnings and growth forecasts, since Corning's photonics business derives 15% of its revenue stream from Nortel.

"We think it will be difficult for Corning to grow its photonics business at prior expectations of 75% and 90% in 2001," Fox wrote. "We now look for 45% growth to around $1.4 billion. Our previous estimate was $1.7 billion. The company's new guidance, released this morning, is for 50% photonics sales growth." Nortel closed down $9.75 cents, or 32.77%, to $20; Extreme Networks was down $5.81, or 15.4%, to $32.06; Cisco was down $2.56, or 8.3%, to $28.25; JDS was down $9.31, or 20.6%, to $35.81; Ciena was off $6.38, or 7.2%, to $82.63; Exfo was down $5.56, or 13.6%, to $35.44; Avanex closed down $7.44, or 17.2%, to $35.94; and, finally, Corning finished the dismal trading day down $9.01, or 21.5%, to $33.

Mergers, acquisitions and joint ventures

Oooh. The mystery, the intrigue, the suspense -- the PR release!

XL Capital

(XL)

, based in beautiful Bermuda, reported a dramatic rise in fourth-quarter profit, meeting expectations, because of gains from investments. The Hamilton, Bermuda-based company also said it would buy the multicorporate insurance business of Winterthur Insurance, a unit of Swiss bank Credit Suisse Group. Credit Suisse said it was selling the unit for $600 million.

XL reported operating income of $143.0 million, or $1.13 a share. That compared with profits of $32.3 million, or 25 cents a share, in last year's fourth quarter. The results met analysts' average forecast of $1.13 cents a share, according to research firm

First Call/Thomson Financial

.

The company said plans to cut some staff and realign its operations have been completed. XL closed up $1.99, or 2.6%, to $77.70.

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Earnings/revenue reports and previews

Corning

(GLW) - Get Report

this morning lowered its year-over-year top-line outlook in response to a warning by one of its key customers feeling the pain of the softening telecommunications market. However, the company maintained its earnings per share forecast for the first quarter and full-year 2001.

The Corning, N.Y., company, which has moved from making household wares to high-speed fiber-optic cables, said it now sees about 50% revenue growth in 2001, down from its previous estimate of 75% to 90% year over year growth. Corning said it was responding to "the announcement that one of our key customers in the photonic technologies business has reduced its growth rate." The company did not specify the name of its customer.

Citing the strong demand for its product MetroCor, the company nevertheless maintained its first-quarter earnings guidance of 28 cents to 31 cents a share. Analysts on average polled by

First Call/Thomson Financial

expects the company to earn 29 cents a share, up from 23 cents a share in the same period last year.

For 2001, the company said it still sees EPS of $1.40 to $1.43. First Call analysts expect earnings of $1.40 a share, compared with $1.23 a share in 2000. Corning, as mentioned above in that long, long list, finished the dismal trading day down $9.01, or 21.5%, to $33.

Telecommunication companies like

AT&T

(T) - Get Report

have been facing deteriorating businesses, which has transpired into an industry-wide

spending slowdown.

Covad Communications

(COVD)

said today it would postpone its fourth-quarter and 2000 earnings release to deal with "complex accounting issues related to revenue recognition," and said it expects to take a "substantially larger" restructuring charge due to its cost-cutting actions.

The

Nasdaq stock market helped out by halting trading in the stock of the broadband services provider.

The Santa Clara, Calif., provider of broadband Internet services, which had planned to report earnings Feb. 27, said the accounting issues relate to revenue recognition, new accounting rules, restructuring charges and asset impairments. The review, which includes evaluating its Internet service provider contracts, may affect previously reported results, Covad said.

The broadband service provider has been facing a glut of troubles of late, including deadbeat customers and financial woes that have led it to cut jobs . Covad closed Thursday at $2.88.

Nextel Communications

(NXTL)

posted a sharply narrower fourth-quarter loss but warned of higher operating expenses in the first half of the year.

The Reston, Va., company, the nation's largest digital mobile-phone operator, said it lost $61 million in the fourth-quarter, or 8 cents a share, including a one-time gain, compared with a loss of $369 million, or 52 cents a share, in the same period last year.

Quarterly revenue rose to $1.65 million from $1.1 million last year, as the company added 2.16 million new subscribers within its domestic operations. Nextel closed down $4.13, or 13.95%, to $25.44.

After Thursday's Close

The Nortel news might be huge, but it wasn't the only thing affecting the tape today. Check out these other major earnings releases, with news from

Dell

(DELL) - Get Report

,

Hewlett-Packard

(HWP)

and

CMGI

(CMGI)

. Dell closed down today, Friday, by $1.50, or 6%, to $23.50; H-P was down $3.22, or 8.9%, to $33.13; CMGI was down 50 cents, or 9.8%, to $4.59.

Novell Tops Estimates, but Sees Tough Comparisons Through First Half

Agile Software Beats Forecasts on Strong Revenue

Analog Devices Meets Expectations But Sees Earnings Slowdown

Boston Scientific Buys Interventional Technologies For $345 Million

CMGI Reaffirms Second-Quarter Revenue Outlook

Dell Misses Lowered Profit Forecast by a Penny, Revenue Tops Estimates

Hewlett-Packard Revenue Falls Short of Expectations

Nortel Warns of Shortfall as Downturn Grows 'More Severe'

Schwab Says Trading Revenue Slowdown Could Hurt Bottom Line

Schering-Plough Sees Manufacturing Problems Hurting First Quarter

AptarGroup

(ATR) - Get Report

makes a fortune making and selling the aerosol pumps that allow used car salesmen to put on too much cologne. The company said that 2001 earnings growth would come in between 10% and 15% due to a stronger fragrance market. Used car salesmen, rejoice! AptarGroup closed down 70 cents, or 2.4%, to $28.60.

Eden Biosciences

(EDEN) - Get Report

is a small outfit dedicated to making your tomatoes happy. The company makes a product called Messenger, which triggers naturally occurring defense mechanisms in plants in order to keep the bugs and pests away. It announced fourth-quarter pro forma net losses of 12 cents a share, narrower than the 13 cent loss expected by Wall Street. Revenues increased to $988,000 from the year ago $37,000. For those of you who like big numbers -- that's a 2,570% gain. Then again, Eden didn't have a single product last year, just a consulting business. Eden closed up $2.19, or 8.6%, to $27.50.

Genecor International

(GCOR)

announced fourth-quarter earnings of 6 cents a share, doubling the 3 cent First Call/Thomson Financial estimate. But those earnings are much less than last year's 15 cent profit. Going forward, the company said that earnings would meet estimates. Genecor International closed down 38 cents, or 2.1%, to $17.25.

InterMune

(ITMN)

announced a pro forma loss of 27 cents a share, topping the 29 cent loss expected by analysts, but missing out on the year-ago loss of 23 cents. One bright spot was sales of Actimmune, used to treat severe osteoporosis, which increased to $4.2 million from $1.6 million. Going forward, the company expects a $36 million loss for 2001. It posted a $52 million loss in 2000. InterMune closed down 75 cents, or 2.1%, to $34.25.

Placer Dome

(PDG)

sounds like a nice place to be -- like the Thunderdome of Mad Max fame without all the fighting. Unfortunately, that wasn't the case. This gold-mining company announced fourth-quarter losses of 27 cents a share, missing the analysts' call for a 9 cent profit. The high cost of mining gold was cited as a major factor in the miss. This quarter, a ounce of gold cost $161 to produce. Last year, that figure was $150. Placer Dome closed up 35 cents, or 4.4%, to $8.35.

Serena Software

(SRNA)

makes software that eases the installation of software on a mainframe. It should not be confused with Serena Altschul, the blonde

MTV

anchorwoman. Anyway. The software company announced fourth-quarter earnings of 26 cents a share, topping the 24 cent estimate and last year's 17 cents. Revenues rose 26%. Serena Software closed up 88 cents, or 3.7%, to $24.50.

Universal Health Services

(UHS) - Get Report

, the No. 3 hospital management company, announced fourth-quarter earnings of 77 cents a share, topping the First Call/Thomson Financial estimate by a slim penny. Revenues rose to $614.8 million from $519.4 million in the year-ago quarter. Universal Health Services closed up 50 cents, or 0.6%, to $85.15.

Wild Oats

(OATS)

might sound like some prodigal member of the Quaker kin, but really, it's a supermarket chain catering to the earthy crunchy set. The company announced fourth-quarter earnings of 4 cents a share, right what Wall Street expected. The quarter was negatively impacted by costs related to buying more natural foods supermarkets. The 2001 earnings are expected to come in between 30 cents and 35 cents a share, better than the 26 cent analyst estimate. Wild Oats closed up 63 cents, or 11.4%, to $6.13.

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Analyst actions

Dell

(DELL) - Get Report

and

Hewlett-Packard

(HWP)

were both taken to task by analysts in the wake of last night's earnings release.

Despite the negativity in the PC sector,

Merrill Lynch

analyst Steven Fortuna was happy with Dell's quarter and reduced his estimates as visibility remains fogged in. He cut his fiscal 2002 (calendar 2001) sales forecast to $37.1 billion from $37.5 billion and reduced his 2002 earnings per share figure for a second time, lowering it to 82 cents from 85 cents.

Credit Suisse First Boston

analyst Kevin McCarthy wrote a love letter to the stock, saying Dell was the "best horse on a sloppy track." McCarthy did not adjust his estimates or rankings on the stock, choosing to comment on the positive results of the fourth quarter. "Dell gained market share in every product category and in every region," he wrote. "We continue to believe Dell is the safest stock to own in the computer hardware group."

Lehman Brothers

reduced its 2002 earnings per share estimate on Dell to 78 cents from 84 cents, while dropping its forecasted growth rate to 8% from 13%. The current Wall Street consensus calls for Dell to earn 90 cents a share. "Unfortunately," the company's memo began, "We believe consensus is likely to be ... higher on both. Also margins are expected to stay flat for the next one to two quarters."

Prudential Securities

analyst

Kimberly Alexy cut her 2002 earnings per share estimate to 82 cents from 87 cents. "We continue to like the stock long-term, but expect limited catalysts until growth visibility improves."

Meanwhile, Hewlett-Packard's earnings release was either a complete failure or a total anomaly. Lehman Brothers was fairly positive on H-P, while Credit Suisse First Boston clearly was not.

Lehman dropped its 2001 earnings per share estimate to $1.60 from $1.70 and put its 2002 earnings per share estimate at $1.90, 8 cents lower than the current Wall Street consensus.

CSFB analyst Kevin McCarthy, who had nice things to say about competitor Dell, blasted the company for dropping the ball. "H-P posted poor performance in nearly every operating group. While citing a slowing U.S. economy, the company took the blame for poor execution in several product areas," the analyst wrote. "We believe the stock will underperform in the next several quarters." McCarthy lowered its 2001 earnings per share to $1.55 from $1.65.

Additionally,

Prudential Securities

cut its 2001 earnings per share to $1.60 from $1.70 and its 2002 earnings per share to $1.90 from $1.93, while

Goldman Sachs

analyst

Laura Conigliaro lowered her 2001 earnings per share estimate to $1.62 from $1.65.

As noted above, Dell closed down $1.50, or 6%, to $23.50; and H-P was down $3.22, or 8.9%, to $33.13.

Oh, and CSFB lowered its 2001 and 2002 forecasts on

JDS Uniphase

(JDSU)

after a stern warning from

Nortel

(NT)

rocked the tech sector. CSFB cut its 2001 earnings per share estimate to 68 cents from 73 cents, and its 2001 sales estimate to $3.6 billion from $3.9 billion. Going forward, CSFB cut its 2002 earnings per share forecast to 80 cents from 88 cents and its 2002 revenue call to $5.4 billion from $6 billion.

"We believe it is prudent to have more conservative estimates at this time given the deterioration in visibility in optical spending, particularly in North America," the company wrote in a memo to investors this morning. "We believe the lowered visibility encountered by Nortel is not an isolated event and anticipate that

Lucent

(LU)

and

Alcatel

(ALA)

may also be experiencing weakness."

As also noted earlier, JDS closed down $9.38, or 20.8%, to $35.75; Lucent was down 95 cents, or 6.98%, to $12.67.

Upgrades

Heidrick & Struggles

(HSII) - Get Report

: UP to strong buy from buy at Credit Suisse First Boston. Heidrick & Struggles closed down 56 cents, or 1.4%, to $39.56.

On Assignment

(ASGN) - Get Report

: UP to hold from buy at Credit Suisse First Boston. On Assignment closed up $1.38, or 5.8%, to $25.13.

Downgrades

ADC Telecommunications

(ADCT) - Get Report

: DOWN to neutral from buy at W.R. Hambrecht. ADC closed down $1.94, or 13.8%, to $12.06.

At Road

(ARDI)

: DOWN to buy from strong buy at Credit Suisse First Boston. At Road closed down $2.69, or 46.2%, to $3.13.

DPL

(DPL)

: DOWN to hold from buy at Credit Suisse First Boston. DPL closed down $2.08, or 6.9%, to $28.25.

Embratel

(EMT)

: DOWN to neutral from buy at Merrill Lynch. Embratel closed down 88 cents, or 6.5%, to $12.60.

Mutual Risk Management

(MM)

: DOWN to hold from accumulate at Prudential Securities; price target: $15. Mutual Risk closed down 91 cents, or 7.3%, to $11.49.

Navisite

(NAVI) - Get Report

: DOWN to long-term accumulate at Merrill Lynch. Navisite closed down 56 cents, or 20%, to $2.25.

Schering-Plough

(SGP)

: DOWN to hold from buy at Credit Suisse First Boston. Schering-Plough closed down $7.07, or 14.6%, to $41.25.

Sharper Image

(SHRP)

: DOWN to neutral from buy at W.R. Hambrecht. Sharper Image closed down $2.50, or 16%, to $13.13.

Tellabs

(TLAB)

: DOWN to buy from strong buy at Credit Suisse First Boston. Tellabs closed down $8.38, or 14.3%, to $50.13.

Initiations

Extreme Networks

(EXTR) - Get Report

: NEW buy at Credit Suisse First Boston; price target: $55. Extreme Networks closed down $5. Extreme Networks closed down $5.81, or 15.4%, to $32.06.

Foundry Networks

(FDRY)

: NEW hold at Credit Suisse First Boston. Foundry Networks closed down $1.88, or 11.7%, to $14.19.

Redback Networks

(RBAK)

: NEW buy at Credit Suisse First Boston; price target: $60. Redback closed down $2.81, or 7.5%, to $34.88.

SeaChange International

(SEAC) - Get Report

: NEW near-term accumulate, long-term buy at Merrill Lynch; price target: $28. SeaChange closed up 50 cents, or 2.8%, to $18.25.

Washington Mutual

(WM) - Get Report

: NEW market outperform at Goldman Sachs. Washington Mutual closed down 6 cents, or 0.1%, to $50.54.

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Offerings and stock actions

After Thursday's Close

Dreyer's Grand Ice Cream

(DRYR)

announced that it will be doubling its quarterly dividend to 6 cents a share. Yum. Dreyer's Grand Ice Cream ended the day up 56 cents, or 1.8%, to $32.69.

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Miscellany

After Thursday's Close

Hola!

AT&T Latin America

(ATTL)

welcomed Nelson A. Murphy to its CFO position. The stock closed south of the border, lower by 25 cents, or 6.1%, to $3.88.

Nextel Communications

(NXTL)

announced that William Conway would become its new chairman of the board, replacing Daniel Akerson. Akerson will keep his seat on Nextel's board, along with his position as CEO and chairman over at

XO Communications

(XOXO)

. Nextel closed down $4.13, or 13.95%, to $25.44; XO was down 50 cents, or 2.7%, to $18.19.

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By the Numbers

The data on NYSE and Nasdaq percent winners and losers are filtered to exclude stocks whose previous day's volume was less than 25,000 shares; whose last price was less than 5; and whose net change was less than 1/2.

Dow point gain and loss data are based on New York closing prices and do not reflect late composite trading.

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