SAN FRANCISCO -- While the Nasdaq was setting a new record and Internet stocks and chipmakers were on a rampage, a number of software companies were hit hard.
Software companies have suffered through a string of earnings warnings, signaling a major shift in corporate spending. Though most analysts say the money is being funneled toward fixing year 2000 bugs, others say the problem runs deeper.
, software designer
all warned of earnings shortfalls. These reports followed recent earnings warnings from
"When you start to see companies like Axent and Documentum, which have executed flawlessly in the past and have good management teams, preannounce, it's probably Y2K-related," says David Hilal, analyst at
Friedman Billings Ramsey
, adding that software companies may continue to have a hard time for the rest of the year.
But some analysts say the problem with many of the software companies is even bigger than Y2K.
"It's also the products," says George Gilbert, an analyst at
Credit Suisse First Boston
who believes many enterprise software companies are undergoing transitions. "The Web has grown faster than expected."
Gilbert says software companies are scrambling to move to Web-enabled and front-office applications that deal with customers. "They've shifted all their resources to deal with the Web and customers, but they haven't proven
the products to customers," he says.
Aspect Development closed down 14 15/32, or 65%, at 7 15/16. Aspen Technology closed down 3 5/16, or 25%, at 9 15/16, and Axent Technologies closed down 11 15/16, or 60%, at 8 1/16.
Cashing in Chips
It was a big day for chipmakers, which soared for a variety of reasons.
rose 7 1/8, or 7%, at 110 3/4. The company benefited from a
report that said TI remained the top analog chipmaker.
A recovery in computer stocks and seasonal buying to start the new quarter also benefited the chip sector. In addition, there were expectations that chip sales statistics for February to be released today by the
Semiconductor Industry Association
would show a year-on-year increase for the sixth consecutive month.
Claude Hazan, semiconductor analyst with
C.E Unterberg Towbin
, said "there is optimism as we head into the second quarter that the selloff in February has created opportunities."
closed 6 5/8 higher, or 5.5%, at 127 1/2.
closed up 6 9/16, or 12%, at 62 1/8, while
closed up 3 15/16, or 13%, at 34 1/8 and
closed up 6 3/16, or 10%, at 67 15/16.
AOL All Over
in market capitalization.
AOL closed up 16 1/16, or 11%, at 166 1/16. There was a story in the
San Jose Mercury News
by gossip columnist Chris Nolan that suggested AOL could be close to buying
. AOL also said it bought
, a personalized event directory and calendar service.
AOL now has a market cap of around $154 billion, far surpassing the $136 billion market cap of AT&T. AOL's P/E ratio is around 681, just a bit above AT&T's 22.