Sinking on Cinco: Tech Sector Encounters Early Trouble

This weakness comes despite positive words from analysts for priceline.com.
Author:
Publish date:

SAN FRANCISCO -- Even though it's Cinco de Mayo, the tech sector has been doing little celebrating in early trading today.

Coming off what are being viewed as solid first-quarter results,

priceline.com

(PCLN)

received glowing praise from analysts in research notes released this morning. The e-commerce company, which reported Wednesday after the close, posted a quarter loss of 12 cents a share, a cent narrower than the

First Call

outlook.

"priceline.com's early hypergrowth suggests that it could quickly become one of the largest Internet commerce companies," wrote

Merrill Lynch's

Henry Blodget. "Our Internet investment philosophy is to own a basket of the leaders -- and this looks like one of them."

Blodget raised his 1999 revenue estimates for the company by 45% and said even that may be conservative. He expects the stock to remain volatile, "but trend higher long term."

Morgan Stanley Dean Witter

analyst Mary Meeker also had positive comments about the company and reiterated her outperform rating on the stock. But Meeker noted that "given the recent spike in the shares -- up 738% since the

March 29 IPO -- we wouldn't be surprised if PCLN shares experienced some market-related and valuation-related" weakness.

Shares of priceline.com were lately up 1 1/2, or 1%, to 135.

TheStreet.com

took an in-depth

look at the company in a recent story.

Also on the earnings front,

Egghead.com

(EGGS)

was firmer after logging a fourth-quarter loss of 50 cents a share, 6 cents narrower than the First Call forecast. Egghead stock was recently trading up 1 1/4, or 9%, to 14 3/4.

Shares of

Infoseek

(SEEK)

got a lift after an upgrade from

Warburg Dillon Read

. Analyst Michael Wallace upgraded the stock to buy from hold with a price target of 75, saying its valuation is better after recent weakness and he expects sales to be up in its June quarter. The stock was trading up 4 5/16, or 10%, to 49 1/4 in early action.

But the Internet heavyweights were mostly weaker early on.

America Online

(AOL)

dropped 6 3/4, or 5%, to 120 3/8;

Amazon.com

(AMZN) - Get Report

was off 5, or 3.5%, at 138; and

Yahoo!

(YHOO)

slipped 4 1/4, or 3%, to 155.

Design software maker

Autodesk

(ADSK) - Get Report

was hurting after warning that it sees first-quarter pro forma earnings of 10 to 15 cents a share and diluted earnings of 2 to 5 cents a share due to customer transition in the company's product line. The 10-analyst view from First Call called for a profit of 40 cents vs. the year-ago 55 cents. Shares of Autodesk were trading down 4 15/16, or 17%, at 23 9/16.

Newbridge Networks

(NN)

was getting pummeled after warning that its fourth-quarter earnings will come in around 12 to 14 cents a share. The 15-analyst First Call forecast called for earnings of 21 cents vs. the year-ago 12 cents. The stock was off 8 15/16, or 24%, at 27 7/8.

Drives the Internet sector?

Yahoo!

eBay

Amazon.com

America Online

No one stock does