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Off-Hours Trading: Market Looking Strong in Early Action

Lehman, 3Com highlight today's earnings calendar.

Futures were pointing the stock market higher this morning as the week ahead looks light on economic indicators and earnings and heavy on Washington watching.

While several large companies --

Lehman Brothers

(LEH)

and

3Com

(COMS)

today -- are slated to report

earnings this week , most of the market's attention will be on Washington, D.C. and

Fed

Chairman

Alan Greenspan

.

Alan and his pals (also known as the

Federal Open Market Committee

) will get together on Tuesday for a nice lunch, a quiet chat and, possibly, a 25-basis point rate hike for the fed funds rate to 6%. Last week,

Justin Lahart's

The Coming Week looked at just this.

Most market players are expecting the Fed to do its thing, so unless it does something like boost the rate by 50 points (or if it was to do nothing at all) the market seems ready.

Stocks were looking to move higher at the opening today. The

S&P 500

June contract was measured at a negative 0.80 to 1488.20, with fair value calculated at -8.63. The thinly traded

Nasdaq 100

June contract was down 30.5 to 4486.

Friday's After-Hours Trading

By Eric Gillin
Editorial Assistant

It's hard to find somewhere to go after losing close to 25% during a day session.

But if your name is

Xybernaut

(XYBR)

and you make wearable computers, it's really not that hard.

Tonight, the company, which actually

does

market computers on belts and monitors on headsets, dropped 1 1/2 to 15 1/16 on 195,000 shares on

Island

. On other ECNs, the story was a similar one. It was off 1 3/4 to 14 13/16 on 14,000 shares on

Archipelago

. These moves follow that steep decline during the day.

TST Recommends

So why are investors fleeing from Xybernaut, a company that nearly doubled in value on

the first day of March after announcing the reception of a new patent for transferable data?

Well, the company filed its annual report with the

Securities and Exchange Commission

bringing investor sentiment back down to earth. Considering the company has never turned a profit and consistently loses money every quarter, it should come as no surprise to investors that Xybernaut has accumulated a few debts. According to the annual report, as of the last day of 1999, the company had an accumulated deficit of $48 million.

The company's report is something of a disaster, really. Especially to those investors that bought into a hot property without doing the math first. To its credit, Xybernaut has been perfectly up front with the fact that the company will take time to turn a profit. In the report, Xybernaut states its current situation in clear language: "There can be no assurance as to whether or when profitable operations will occur."

Still, investors who rushed into the stock, riding a wave of momentum without checking out the company's core business, received a shock today. The stock was treading just below its open, which was marginally lower, and then tanked at 2 p.m. EST, when the report sank in.

There are some fairly key paragraphs in the annual report, but none more eyebrow elevating than the one detailing some findings from an independent accountant's report. It explains that the company's low capital and debts raise "substantial doubt about its ability to continue as a going concern." This is a caveat based on the need for more investment and capital and one that investors took as a

caveat emptor

.

Still, there are some bright spots for the wearables maker. Gross margins have increased over the previous year, while spending has been curtailed. Revenues have also increased. Xybernaut's net loss has narrowed somewhat, but still remains a fairly big concern.

But the stock got punished today and the mayhem continued this evening. Sometimes the only place a stock can go is down. Especially after soaring 275% this year, as of yesterday's close.

Television on demand isn't just something that Homer Simpson dreams about in between shifts at the nuclear power plant. It's something that

DG Systems'

(DGIT)

future plans are based around.

Geographically positioned at the top spot on both Island and Archipelago, the company rode a wave of goodwill after announcing that it had 725 television stations online and able to get digital adverts over its video distribution network. The company touted its ability to deliver the one thing viewers like Homer loathe the most --

commercials

. Stations can order these spots over DG Systems' network and get them in just a manner of hours.

As a result, the stock rose 1 29/32 to 9 1/8 on 1 million shares on Island and 1 7/16 to 8 5/8 on 50,000 shares on Archipelago.

Tonight was a quiet evening, as Fridays usually are. The bigger fishies were fried over on

Instinet

as a handful of day-session movers coughed up a fistful of dollars.

Microsoft

(MSFT) - Get Report

,

Qualcomm

(QCOM) - Get Report

and

Nortel

(NT)

all dropped in fairly thin post-close activity. Mister Softee gave up 57/64 to 98 31/64 on 340,000 shares after gaining 4 to 99 3/8 during the day. Super Q dropped 1 to 135 1/2 after gaining 3 3/8 to 136 1/4. The company formerly known as Northern Telecom fell 15/16 to 128 on 160,000 shares.

This information is provided by Instinet, a wholly owned subsidiary of Reuters (RTRSY) . For further information, please contact Instinet at www.instinet.com.

Island ECN, owned by Datek Online, offers trading, mainly in Nasdaq-listed stocks, from 8 a.m. to 8 p.m. EST. NOTE: Island, unlike Instinet and Archipelago, counts the buy side and the sell side of the same transaction as two separate trades. Island's reported volume figures thus are twice what they would be if Island followed the same convention as the other ECNs

.

Confused?

TheStreet.com

explains how the rules change when the sun goes down in Investing Basics: Night Owl, a section devoted to after-hours trading.