Software Stocks Show No Softness

SAN FRANCISCO -- The Internet story isn't the only one going on in the tech sector, though at times it seems that way.

Software companies were among the top-performing stocks today. Shares of

Compuware

(CPWR)

, which provides systems-management software, were rallying after the company beat its fourth-quarter earnings consensus by 2 cents last night. The stock was recently up 3 1/8, or 13%, at 26 13/16.

Veritas

(VRTS) - Get Report

, which makes storage software, was higher today after trading down in the past two sessions. Weakness was related to release of pro forma quarterly statements from Veritas acquisition target

Network and Storage Management Group

, of

Seagate Technology's

(SEG)

Seagate Software

unit.

Warburg Dillon Read

said that the information in the quarterly statements may have been misinterpreted and believes that the acquisition is a smart one for Veritas. Veritas was lately up 5 3/8, or 8%, at 69 11/16.

Microsoft

(MSFT) - Get Report

remains in the middle of the ongoing battle over

MediaOne

(UMG)

. MediaOne has confirmed that it has signed confidentiality agreements with both Microsoft and

America Online

(AOL)

to separately discuss new merger deals with each of them.

The Wall Street Journal

reported that both agreements were entered into with the approval of

Comcast

(CMCSK)

, which is trying to save its $48 billion bid to take over MediaOne. Microsoft stock was little changed on the day.

A couple of Internet-related companies have gone public today, and the results have been impressive early on.

Marimba

(MRBA:Nasdaq), an Internet software-management company, was up more than 200% so far today, its first day of trading. It was lately up 42 13/16, or 214%, at 62 13/16.

Also,

Applied Theory

, an Internet service provider and a consultant for midsize businesses, was up 8 11/16, or 54%, at 24 11/16. Kim Polese, president and CEO of the company, took heat in a recent

Fortune

article that criticized her penchant for self-promotion.

The Party's Over?

In his weekly on the Web,

BancBoston Robertson Stephens

analyst Keith Benjamin still sees the Internet sector dropping in the near term.

"With reporting season almost over, few catalysts remain, as we see it, leaving room for the next break in the stock group," he writes. "After last week's one-day correction, we hope that the next round is characterized by a longer lull, with the monsters then leading the recovery, leaving the companies stuck with smaller market segments behind."

A poll conducted by

TSC

gives some indication why breaks in the sector are often followed by a quick recovery. As of 2:15 p.m. EDT, of more than 600 people responding to the question, "Best Internet play?" around 60% have responded "Buy on weakness." Running a distant second, with about 14% of the vote, is "Overvalued -- not playing that game."

Best Internet play?

Buy on weakness

Sell into strength

Overvalued -- not playing that game

Buy no matter what

Earnings are out, so am I