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The Night Watch: Network Appliance Climbs on Good Earnings; Mercator Software Slips on Miss

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(Updated from 6:59 p.m. EST)

After-hours investors, many of whom stayed on the sidelines last night in the wake of



second-quarter earnings report on Tuesday evening, are back in the ring tonight. Postclose trading volume is fighting form. At last look, more than 4 million shares had changed hands on


, while over 3 million shares were in play on



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In the plus column,

Network Appliance


has rallied on news that its third-quarter earnings surpassed Wall Street's expectations. On the downside, shares of

Mercator Software


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have dropped as a result of its fourth-quarter results, which narrowly missed analysts' expectations.

Stargazers Warm to Network Appliance's News

After the bell, data storage manufacturer Network Appliance -- tonight's volume leader -- reported fiscal third-quarter earnings, excluding certain items, of 11 cents per share, up 95% from the year-ago period. According to

First Call/Thomson Financial

, analysts had expected the company to earn 10 cents per share.

At the same time, Network Appliance's reported sales just below Wall Street's forecasts, possibly reflecting the broader slowing in demand for Internet infrastructure already experienced by other companies in that sector. The company reported third-quarter revenue of $288.4 million, up 91% from $151.3 million in the comparable period last year, but about $5 million below Wall Street's target.

In extended trading, postclose patrons bid Network Appliance up 9.8% to $38.63 on Instinet and higher 9.6% to $38.56 on Island, as approximately 1 million shares changed hands on each of the platforms. Network Appliance rival,



, popped 3.2% to $61.40 on Instinet.

Mercator Software's Miss Sends Its Stock Down After Hours

In other earnings news,

Mercator Software


posted a fourth-quarter loss that was wider than Wall Street expected, but reported a 26% gain in revenue. Mercator makes software that lets business integrate their applications both internally and externally.

The software manufacturer posted a pro forma net loss of 10 cents per share, compared with a profit of 6 cents per share in the year-ago period. Analysts had expected Mercator to report a 9-cent per share loss. Revenue, however, increased to $39.1 million from $31 million a year ago, above the company's $38 million revenue forecast.

The revenue gain failed to convince nighttime traders, who focused on the bottom line and sent

Mercator Software


down 21% to $8.25 on Instinet.

ONI Systems Edges Up on Fourth-Quarter Outcome

Also this evening,

ONI Systems


, which manufactures communications networking equipment, posted a fourth-quarter loss that beat Wall Street's raised expectations and said that it plans to break even on an operating basis by the end of the year.

ONI Systems recorded a loss of 9 cents per share, excluding noncash charges, compared with 59 cents per share in the year-ago period. Analysts initially estimated that the company would lose 17 cents per share, but then raised their consensus to a loss of 11 cents per share. The company expects to break even on an operating basis in the fourth quarter of 2001.

ONI added 1.5% to $51.50 on Instinet and climbed 1% to $51.25 on Island. Is Profitable

Investors like to hear the words dot-com and profitable in the same sentence. Tonight, news that


rang up a profit in the fourth quarter was music to postclose traders' ears., which provides Internet domain name registration services, posted a fourth-quarter profit of 6 cents per share, compared with a year-ago loss of 5 cents per share. The company's revenue totaled $28.9 million, compared with $5.2 million in the year-ago period.

Shares of surged 24.5% to $8.48 on Instinet.

This information is provided by Instinet, a wholly owned subsidiary of Reutersundefined. For further information, please contact Instinet at

Island ECN, owned by Datek Online, offers trading, mainly in Nasdaq-listed stocks, from 7 a.m. to 8 p.m. EST.


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