Relatively happy days are here again.

If that seems less than convincing, that's the idea. Tech stocks are in a phase where news that's relatively good is good enough. And alas, in an environment like that, you're back to needing a psychologist to pick stocks, not an analyst of fundamentals.

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A Few Good Days and Suddenly It's 1999 Again

Consider one of the most interesting comments to be unleashed by the Wall Street information machine Thursday morning amid a torrent of commentary by analysts trying to figure things out.

Gunnar Miller, semiconductor-equipment analyst for

Goldman Sachs

, 'fessed up to clients that he had badly underestimated the fiscal third-quarter earnings of

KLA-Tencor

(KLAC) - Get Report

, a San Jose, Calif.-based maker of chip-testing gear. Despite having preannounced worse results, KLA turned in earnings of $91.4 million, or 48 cents per share, compared with the $66.2 million, or 35 cents Miller had predicted. Still, KLA's book-to-bill ratio is 0.8, meaning its shipments are greater than its new order rate. Its orders were down 29% sequentially. As such, Miller said the company's stock -- at $47.08 Wednesday night, already up 85% from its 52-week low in October -- "is likely to trade down near-term once fundamentals matter again."

That quip is noteworthy for two reasons. First, KLA's stock shot up 12% to $52.80 Thursday. And second, I thought fundamentals

do

matter again. How naive.

Another example?

Siebel Systems

(SEBL)

demonstrated Wednesday night why it's one of the best software companies in Silicon Valley by beating Wall Street's earnings estimates and producing a solid financial performance in part by controlling costs. And yet, anyone who listened to the company's conference call could tell that the outlook is ugly. CEO Tom Siebel flat-out said the climate is lousy and predicted Europe is next to feel the pain. He said the company lopped off the worst-performing 10% of its workforce during the quarter, double the normal biannual 5% housecleaning. Despite ably demonstrating that he's in control of the situation, Siebel gave investors no comfort that the financial picture is improving.

"A near-term 'relief' rally could occur given that results and outlook may not have been as grim as some had feared," commented

Merrill Lynch

software analyst Craig Wood on Thursday morning. "But in the current period of estimate reductions and reduced visibility, coupled with valuation concerns, sustained upside may be tempered."

TheStreet Recommends

There was nothing temperate about the market's reaction to Siebel's quarter. Siebel's stock jumped 37% to $46.44 Thursday, putting it back to where it traded at the end of February and now down

only

31% for the year.

And then there's

Microsoft

(MSFT) - Get Report

, which surprised Wall Street by

reporting fiscal third-quarter revenue of $6.5 billion, up 14% from the year-earlier period and far more than the $6.2 billion or so analysts had expected. Clearly, doing better than the Street expects is preferable to doing worse. But how good was Microsoft's news? Back to Psych 101.

SG Cowen

analyst Drew Brosseau had a good read on the subject in an

interview with

TheStreet.com's

Joe Bousquin

. Wall Street basically preannounced for Microsoft by lowering its numbers over the last month, Brosseau joked. That enabled the company to "beat" expectations on the strength of better-than-expected sales of Windows 2000 software to corporations. Its results were about equal, however, to what Wall Street previously had expected.

Again, and yet ... Microsoft actually lowered earnings estimates for the year ending June 30, 2002, to a range of $1.90 to $1.94 per share, compared with the $1.96 analysts had expected. The smart set will tell you that the whispers on Wall Street actually were for no earnings growth in fiscal 2002, or about $1.77 per share, so naturally the 7% earnings growth implied by the low-end $1.90 figure would be impressive.

But Microsoft isn't out of the woods yet in so many ways. Microsoft Chief Financial Officer John Connors revealed that the company's estimate for worldwide PC shipments growth in the current fiscal year is around 7%, down from a previous guesstimate of 10%. He noted, as he has in past conference calls, that the introduction of Microsoft's Xbox video game line will hurt profit margins because hardware is less profitable than software. Only once Microsoft has millions of consoles in the hands of eager game players -- assuming Xbox is on time and successful -- will the company earn the kinds of returns it likes to see on its products.

Of course, Microsoft is rock-solid. "They're the sleeping elephant, the Microsoft of old," gushed Henry Blodget, who drastically lowered his estimates on the company in early March and thus was caught flat-footed Tuesday. Microsoft's cash and equity securities alone -- $47 billion, up $2 billion from the end of the year despite the market meltdown -- are bigger than the market capitalization of most other technology companies. But its stock is up 57% this year and it trades for 36 times next fiscal year's earnings. Remember, the reduced forecast is for about 7% earnings growth, but Microsoft gets a multiple of 36.

Is Microsoft a survivor? You betcha. Is it a growth company worth a lofty premium to its growth rate? Nope. Is this a market with lots of good news?

It's all relative.

In keeping with TSC's editorial policy, Adam Lashinsky doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune called the Wired Investor, frequently guest hosts the TechTV cable television news show Silicon Spin, and is a regular commentator on public radio's Marketplace program. He welcomes your feedback and invites you to send it to

Adam Lashinsky.