Networkers Show Spunk During Friday's Tumult

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If you studied the network stocks Friday morning, you would uncovered evidence of just how resilient this market is.

As the market tumbled and swirled, the big networkers showed the old spunk that helped push the stock market to record levels throughout 1996. Even as

Intel

(INTC) - Get Report

dove lower in the morning,

Cisco

(CSCO) - Get Report

and

Ascend

(ASND) - Get Report

held their ground, each losing less than a point.

"All week the group has been pretty stable, probably because they haven't been the focus of the market," one trader said.

Along with Cisco, newly resurgent

Bay Networks

(BAY)

,

Cabletron

(CS) - Get Report

and

MRV Communications

(MRVC)

traded close to their closing prices from Thursday, slipping barely a fraction at times. Bay finished up 5/8 to 36 1/4, Cabletron slipped 3/16 to 31 9/16 by the close and MRV added 3/4 to 28 1/8 before the bell.

Bay's buoyancy in this stormy market underscores the strength of the networking sector - as well as the strength of the technology sector. For nearly four months investors have driven up shares of Bay. On Tuesday, Bay produced the only news of the week for the sector as execs predicted surprisingly strong revenue for the current quarter. The company's stock rose 10.7% over the course of the week.

Among other networkers Friday,

Fore Systems

(FORE)

grudgingly gave ground. Through much of August the stock has climbed on rampant takeover talk. Fore closed down 5/8 at 19 3/8. Perhaps investors realized they were pushing the stock past whatever premium the embattled ATM vendor might fetch from proposed suitors such as

Lucent Technologies

(LU)

or

Northern Telecom

(NT)

. Fore trades at 54 times trailing earnings and 4.7 times sales, even though its earnings are shrinking.

The stalwart performance by the networkers on Friday should embolden the bulls on Monday. When the group of seven major networkers turned sharply south early this year, losing 39% from Jan. 21 to April 28, the Nasdaq skidded 12%. Last summer told a similar tale: from July 3 to July 23, 1996, investors chewed 25% off the market caps of the seven big networkers and the Nasdaq dropped 11%.