Pulse: Harmonic Convergence of Sorts Makes Tech Shine
The
Nasdaq
went back over 3000, sparked by a tech rally with a lot of causes: satisfaction with the valuation of some stocks, short-covering, a tapering of tax-loss selling and the imminent end to the presidential election debacle.
Semiconductors again paced the rally, led by some of the biggest names in the sector.
Intel
(INTC) - Get Intel Corporation Report
closed up 10.1%, and
Motorola
(MOT)
, which issued an earnings warning last week, finished the day up $2.37, or 12.3%, to $21.43. The
Philadelphia Stock Exchange Semiconductor Index
rose 6.9%.
Broadband communications chipmaker
Broadcom
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finished 11.4% higher after announcing a major networking deal with
TheStreet Recommends
3Com
(COMS)
.
After the market closed,
Advanced Micro Devices
(AMD) - Get Advanced Micro Devices, Inc. Report
announced that its sequential growth for the quarter ending Dec. 31 would be flat or only nominally higher than the previous quarter, missing earlier estimates of high single-digit growth.
AMD said its earnings per share would be between 50 and 60 cents.
UBS Warburg
had issued lowered estimates for AMD to 54 cents per share this morning. Before the announcement, AMD had closed up 7.8%.
But not everybody could get away with delivering bad news, especially if you were a company in a sector known for its highfliers.
JNI Corp.
(JNIC)
, which makes fiber switches for connecting servers and storage computers, announced this morning that it would miss fourth-quarter sales estimates by as much as 12%.
Shares of JNI fell $28.25, or 44.8%, to $34.75. Competitor
Emulex
(EMLX)
also fell on the news, closing down 6%, after rising 42% in the last week.
The one losing tech index, though, was the
Philadelphia Stock Exchange Computer Box Maker Index
, which slipped into the red at 0.68% down, stifled by a weak showing from
Sun Microsystems
(SUNW) - Get Sunworks, Inc. Report
.
Banc of America Securities
analyst Kurtis King wrote that weak demand was causing Sun to offer 3% rebates to U.S. resellers through the end of the year, a first for the company in some retailers' memory. King wrote that he is reviewing his rating and price target for the stock.
Goldman Sachs
analyst Laura Conigliaro wrote that she expected Sun to meet, but not beat, Street estimates for the quarter, and that the stock would remain under pressue in the near term.
The remarks helped take Sun down $4.94, or 12.7%, to $34. Sun has closed down for three consecutive sessions and lost 9% on Friday after rumors swirled over trouble involving some kind of accounting procedure. The company denied any problems and was defended in an intraday note by
Merrill Lynch
.
As analysts had warned, Internet advertising agency
DoubleClick
(DCLK)
announced that it would miss earnings estimates for the fourth quarter. But the stock, which closed Friday 91% off its 52-week high of $135.12, finished today down only 68 cents, or 0.5%, to $11.94.
3:03 p.m. ET: Big Tech Outshines E-Commerce
Tech stocks continued where they left off Friday, trading slightly higher on the expectation of presidential news, but slumping when it comes to shares dependent on Internet advertising and e-commerce.
High tech giants
America Online
(AOL)
and
Microsoft
(MSFT) - Get Microsoft Corporation Report
were both up on news out of Washington -- although from different parts of Washington.
A
Washington Post
story this morning said members of the
Federal Trade Commission
were prepared to approve the $183 billion AOL-
Time Warner
(TWX)
merger Thursday, sending AOL up $1.40, or 3%, to $48.30.
Meanwhile, an anticipated Bush victory in the U.S. Supreme Court looks like good news for Microsoft and its continuing fight over trade practices. Microsoft was trading up $2.68, or 4.9%, to $57.13.
PC chipmaker
Intel
(INTC) - Get Intel Corporation Report
, which confirmed Thursday that it was having its worst quarter in a decade and rose 5.2% the next day, continues to rise today, after announcing an advance in transistor speed that will mean smaller and faster chips in the future. Intel was trading up recently $2.19, or 6.4%, to $36.19. Intel was pacing the
Philadelphia Stock Exchange Semiconductor Index
, which was trading up 6%.
Like Intel, the weakness in PC demand cast a shadow over fellow chipmakers
Advanced Micro Devices
(AMD) - Get Advanced Micro Devices, Inc. Report
and
Micron Technology
(MU) - Get Micron Technology, Inc. Report
. Both had their financial projections for the current quarter and subsequent two quarters reduced by
UBS Warburg
analyst David Wong in a note this morning.
Wong wrote that the continuing weak prices for DRAM chips, which provide the extended memory for PCs, might be in Micron's favor, by allowing it to gain market share.
Investors ignored the bad news, most likely figuring that the worst was already priced into chip stocks. AMD was trading up 7% and Micron was ahead 8.2%.
Opticals continue to shine, especially
Ciena
(CIEN) - Get Ciena Corporation Report
, which announced revenues Thursday that beat Street estimates. Shares of Ciena climbed 42.3% last week. Today,
Goldman Sachs
raised its estimates for the 2001 and 2002 fiscal years. Ciena was trading up $2.37, or 2.1%, to $116. 37
Optical component maker
Avanex
(AVNX)
also turned in a bright performance. Avanex, whose stock price skidded 53.5% during November, has risen 60% since the start of December. Avanex was trading up $9, or 10.9%, to $92.50.
While
TheStreet.com Internet Index
was trading up 1.5%, many of the e-commerce and advertising-dependent stocks were suffering from diminished expectations.
Wit SoundView
and
Robertson Stephens
both issued downgrades of
Yahoo!
(YHOO)
this morning, citing the Internet portal's heavy reliance on an increasingly weak online advertising environment.
Merrill Lynch
analyst Henry Blodget wrote this morning that the portal seemed to be discounting more in this quarter than last year, but was able to get higher ad prices than at competing portals.
Yahoo! was trading down recently $1.56, or 4.8%, to $33.37.
Leading Internet ad agency
DoubleClick
(DCLK)
, which laid off more than 150 workers last week, is holding a conference call after the market closes to discuss fourth-quarter revenues, which
SG Cowen
analyst Scott Reamer said would likely mean the numbers will go down. DoubleClick was dropping 67 cents, or 5.7%, to $11.31 before the call.
A
Wall Street Journal
report this morning indicated that online holiday sales would be somewhat below expectations. A Goldman Sachs research note said that holiday sales will likely be one and a half to two times more than last year's, largely due to early online shoppers, but that the rate of growth had slowed.
The reports were bad news for e-tailers
eToys
(ETYS)
and
barnesandnoble.com
(BNBN)
. eToys was trading down 14.6% and barnesandnoble.com was trading down 5.9%.
Those woes didn't touch leading e-tailer
Amazon
(AMZN) - Get Amazon.com, Inc. Report
, which was trading up $1.13 recently after
Morgan Stanley Dean Witter
analyst Mary Meeker wrote this morning that it appeared on track to make top-line estimates of $1 billion for the quarter.
