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Wednesday: It's Nasdaq's Turn to Head Higher

By John J. Edwards III
Staff Reporter

The big blue-chips took a breather from their recovery rally today, but the tech-driven

Nasdaq Composite Index

would have none of it. The exchange, powered by huge strength in


(MSFT) - Get Microsoft Corporation Report



(INTC) - Get Intel Corporation Report

, headed higher despite modest declines in the

Dow Jones Industrial Average

, the broader

S&P 500

and the price of the benchmark 30-year Treasury bond.

With the economic-data environment quiet until next week, market watchers pointed to the strong earnings reports of the current season to explain the bounce in the large-caps yesterday and the Nasdaq today.

"The earnings are coming in way, way ahead of expectations," said Jeffrey Applegate, chief investment strategist at

TheStreet Recommends

Lehman Brothers

. He said upside earnings surprises are outpacing downside ones 4 to 1, making this the 18th straight quarter in which earnings have beaten overall estimates.

Tech bellwether


(IBM) - Get International Business Machines Corporation Report

provided a case in point after the close, reporting first-quarter earnings of $2.37 per share versus the

First Call

consensus estimate of $2.28 and the year-earlier $2.21. Big Blue rose 2 3/8 to 142 3/8 during the session as traders anticipated a good report.

Goldman Sachs

market strategist Abby Joseph Cohen provided more detailed information in a research note today, citing data from the


statistics service showing that 62% of the S&P 500 companies that have reported earnings for the prior quarter beat estimates. Cohen wrote that she drew two lessons from the solid performance: "Currency was once again the dog that


bark," and "Margins do


appear to have come under pressure in the first quarter."

Applegate noted that the worries about interest rates that gripped the market until recently will doubtless return, but he said that shouldn't stop the S&P 500 from rallying to finish the year at 850 to 875. "It's not appropriate to characterize this as a cyclical bear market," he said. "The


is tightening to slow but not stop GDP."



smart-card technology could someday make money obsolete, but the company sure raked in a lot of it today. VeriFone's shares exploded up 17 1/4, or 57.3%, to 47 3/8 after



agreed to acquire the company in a $1.8 billion stock swap. Hewlett-Packard lost 1 1/8 to 49 3/8.

Upmarket retailer



went downhill on last night's news of a disappointing second-quarter preview and a $290 million bid for bankrupt


. Saks said it expects to earn about 20 cents per share in the second quarter, compared with the First Call consensus estimate of 32 cents. The company's shares were ripped 9 3/4 to 19 5/8.


Dow Jones Transportation Average

continued its bull run, rising 44.69 to a record 2580.55.

US Airways

(U) - Get Unity Software, Inc. Report

led the way with a powerful gain of 5 1/4, or 18.2%, to 34 1/8. The former


earned $1.45 per share in the first quarter, blowing away the First Call expectation of 76 cents and the year-ago loss of 86 cents. Other airline gainers included

United Airlines



(UAL) - Get United Airlines Holdings, Inc. Report

, up 1 5/8 to 80 1/2,

American Airlines




, up 3 1/8 to 92, and


(DAL) - Get Delta Air Lines, Inc. Report

, up 2 3/4 to 98 1/8.



continued its precipitous descent, dropping 1 23/32 to 7 5/16 after saying it expects second-quarter revenue of $300 million to $335 million and an unspecified "slight" profit. Presumably a slighter profit than the First Call expectation of 16 cents per share.



surged 7 3/4 to 42 5/8 after reporting first-quarter earnings of 14 cents per share, 2 cents better than the First Call view and ahead of the year-ago 8 cents. That's good news, for a change, for poor old

Pilgrim Baxter

. As of March 31, PeopleSoft was the largest holding in the

PBHG Large Cap 20


(PLCPX) - Get PIMCO Long Term Credit Bond I2 Report

, the third-largest holding in the

PBHG Growth



and the third-largest holding in the

PBHG Core Growth



. Things were different for PBHG

yesterday, as

The Street




, which is partnering with PeopleSoft on business software, rallied 2 5/8 to 27 1/2 in advance of its post-close earnings report. The company earned 9 cents per share in the first quarter, a penny ahead of the First Call expectation and better than the year-earlier 4 cents.


(DIS) - Get Walt Disney Company Report

gained 7/8 to 79 1/8 after reporting second-quarter earnings of 49 cents per share versus a pro-forma 30 cents, beating the First Call view by 4 cents.

Alwaleed bin Talal bin Abdulaziz al-Saud is one busy prince. With the dollar bills barely cool on his purchase of a 5% stake in


(AAPL) - Get Apple Inc. Report

, the Saudi royal struck a deal to develop up to 34

Planet Hollywood


restaurants in 23 countries. He bought a 1% stake in the company, probably without reading

The Street's


April 7 story on its stock-option shenanigans. Planet Hollywood, which today reported first-quarter earnings of 10 cents per share, rose 2 1/2 to 18 9/16. First Call was looking for 9 cents versus the year-ago 4 cents.

Pharmacia & Upjohn


plunged 4 7/8 to a 52-week low of 30 after warning that its first-quarter results will fall short of expectations.

The Street

took a look at that and other P&U woes in today's

Midday Musings. Other drug stocks slipped as investors took profits, with


(MRK) - Get Merck & Co., Inc. Report

down 1 1/2 to 87 3/4,

Johnson & Johnson

(JNJ) - Get Johnson & Johnson Report

down 1 to 58 and

Bristol-Myers Squibb

(BMY) - Get Bristol-Myers Squibb Company Report

down 3/4 to 62 3/4.



got squashed after reporting first-quarter earnings of 18 cents per share, far off the First Call estimate of 30 cents and down from the year-earlier 23 cents. The software company lost 8 5/8 to 26 5/8 and traded at a 52-week low of 22 1/4 intraday.

Alex. Brown

downgraded the stock to buy from strong buy.



boomed higher after reporting first-quarter earnings of 18 cents per share versus the year-ago 8 cents. First Call had no estimate on the company. Its shares gained 7 to 59 1/2.

Quaker Oats


was up 1 5/8 to 39 7/8 after reporting in-line earnings of 24 cents per share versus the year-ago 22 cents. The company, which recently shed its troubled


tea-and-fruit-drink unit, said it plans to increase its share buyback authorization and focus on improving its international food operations.

Where have you gone,

Phil Rizzuto

? The

Money Store


, for which the lovable Scooter used to shill, slid 1 5/8 to 18 7/8 despite reporting first-quarter earnings of 41 cents per share. That beat the First Call expectation of 36 cents and the year-ago 27 cents, but the company said delinquencies rose faster than expected in the quarter. Borrowers clearly don't fear cuddly new spokesman

Jim Palmer


Bausch & Lomb


added 1 to 40 1/8 despite missing the First Call estimate of 30 cents per share by a dime with its first-quarter results. The eye-care company announced a restructuring that it expects will save $100 million in 1999.



leapt 5 1/2 to 30 1/2 after saying it will sell its

Hamilton Direct Response Group

for about $46 million and focus on its branded-giftware business.



inked a deal to acquire

Peak Technologies


in a $210 million cash transaction. Peak jumped 4 5/8 to 17 1/2 and Moore edged up 1/2 to 20 3/8.



was carried higher by a

Merrill Lynch

upgrade to near-term buy from accumulate. Samsonite remains rated long-term buy and was named Merrill's Focus One stock of the week. It gained 2 7/8 to 41 5/8.

Quintiles Transnational


, whose name conjures up fevered visions of


and high-school competition hell, moved up 3 5/8 to 53 5/8. The drug-development company reported first-quarter earnings of 30 cents per share, better than the First Call view of 28 cents and the year-ago 13 cents.

Morgan Stanley

upped the stock to strong buy from outperform.


(TKC) - Get TURKCELL Iletisim Hizmetleri AS Report

reported third-quarter earnings of $1.12 per share, beating the First Call expectation of 96 cents and the year-ago 52 cents. The company said it expects to earn $1.10 to $1.15 in the fourth quarter ending June, compared with a First Call estimate of 99 cents. Its shares rose 3 1/2 to 61 7/8 and traded at a 52-week high of 62.

Zebra Technologies

(ZBRA) - Get Zebra Technologies Corporation Class A Report

was unchanged at 23 after reporting first-quarter earnings of 46 cents per share, higher than the First Call estimate of 32 cents and the year-ago 22 cents.