The Night Watch: PSINet Tops After-Hours Action, but Stock Still Slumping

Author:
Publish date:

Updated from 6:37 p.m. EST

High-speed Internet access provider

PSINet

(PSIX)

jetted to the top of tonight's list of most actively traded stocks on

Island

ECN, although it got there on the heels of some bad news.

Image placeholder title

After the bell, PSINet announced that a bank is selling up to 11.4 million shares of the company's stock that were pledged by CEO William Schrader as collateral for a loan. The bank informed Schrader that it was in the process of selling some or all of those shares to make its margin call. (A margin call requires a customer to deposit money or stock to meet the minimum maintenance requirements of a margin account.)

As a result of the latest news, shares of PSINet dropped 28 cents, or 14.1%, to $1.72 on Island. The company's stock finished the day nearly 97% off the highs it hit last March.

Earlier today, the Internet service provider announced that its board of directors has retained

Goldman Sachs

as the company mulls over financial alternatives, including a possible sale.

Earlier this month, PSINet's stock tanked when it announced that third-quarter revenue missed Wall Street's estimates and gave a pessimistic financial outlook. That same day, the company said its president and COO had stepped down. (

TheStreet.com

covered PSINet's latest news in a separate

story.)

Elsewhere, shares of

VA Linux

(LNUX)

, down 89% since last March, got some relief tonight after reporting first-quarter results.

The software company reported first-quarter results that met Wall Street's reduced targets. Earlier this month, VA Linux warned that earnings and revenue would miss analysts' forecasts, due to a slowdown in new demand from Internet companies.

VA Linux's first-quarter loss, excluding noncash items, narrowed to $7 million, or 15 cents a share, in line with the lowered estimates, from $7.2 million, or 27 cents a share, in the year-ago period. (

TheStreet.com

reported on VA Linux's earnings in another

article.)

On

Island

, VA Linux, which traded up as much as 18% in early action, advanced $1.38, or 11.5%, to $13.38 and increased $1.25, or 10.4%, to $13.25 on Instinet.

Internet software application provider

Packeteer

(PKTR)

also got a bit of a break from the after-hours crowd.

Shares of Packeteer climbed 81 cents, or 3.6%, to $23.63 on Island, after the company confirmed that it did not expect Intel's restructuring plan to hurt its fourth-quarter results. Packeteer's stock tanked 32% after a

Bear Stearns

report suggested that it would be affected by Intel's plan to reorganize its Netstructure division.

Intel

(INTC) - Get Report

, for its part, edged up 31 cents, or 0.8%, to $40.31 on Instinet having dropped 3.6% today. The

Philadelphia Stock Exchange Semiconductor Index

finished the day down 5.6%.

BellSouth

(BLS)

rung up investor attention tonight, after it announced that it will cut back its spending on network expansion by $500 million.

The Baby Bell's stock fell $4.25, or 8.6%, to $45 on Instinet.

BellSouth, which controls local phone service for nine Southeastern states, says it expects to spend between $5.5 billion and $6 billion next year, down from the $6 billion to $6.5 billion it had predicted it will spend this year. (

TheStreet.com

talked about BellSouth's slowdown in a separate

story.)

Finally,

Starwood Hotels

(HOT)

, which this morning announced that it has been added to the estimable

S&P 500 Index, decreased 69 cents, or 2.1%, to $32.25 on Instinet. (The stock rose 2.9% during the day session.)

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 7 a.m. to 8 p.m. EST.

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.