Tech Sector Falters, While Net Stocks Continue Climb

Cybershop and SpeedUS.com both inked deals with bigger counterparts, lending a boost to the Internet.
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SAN FRANCISCO -- The enthusiasm that pervaded the tech sector late yesterday is proving to be short-lived. Most tech stocks are on the wane today, led by hardware and server maker

Sun Microsystems

(SUNW) - Get Report

, which cautioned in its

conference call last night that the rest of this year could be difficult because of Y2K and economic troubles in Asia. On a more positive note, Sun did manage to beat third-quarter estimates by a penny a share, reporting earnings of $291 million, or 71 cents a share.

The stock was further hampered after

Merrill Lynch

analyst Steve Milunovich downgraded the stock, based on valuation.

Sun shares topped the

Nasdaq's

most-active list and were recently trading down 4 7/16, or 7.3%, at 56 1/8 after touching its lowest level since March 24.

Onsale Falls

Online retailer

Onsale

(ONSL)

fell 5 1/4, or 15%, to 29 1/2 on concerns that higher marketing and promotion costs would eat into the company's profits. The Menlo Park, Calif.-based company said Thursday that it would waive transaction fees for customers of its

atCost

business, which sells computer-related goods at wholesale prices, and boost marketing spending in an effort to gain market share.

The company also posted a loss of 28 cents a share for the first quarter, wider than the year-earlier loss of 22 cents. Several analysts downgraded the stock Friday.

P-Com Cuts More Fat

P-Com

(PCMS)

, maker of network access systems for the wireless market, said it would cut 10% of its workforce as part of an ongoing campaign to lower costs. This comes after a 10% cut in the workforce announced in September and 10% pay cuts by senior executives.

Shares of P-Com were down just more than a point, or 16%, at 5 3/4.

Deals Boost Internet Stocks

Shares of online retailer

Cybershop

(CYSP)

jumped after the company inked a deal with

Inktomi

(INKT)

to be included in Inktomi's Shopping Engine.

Cybershop was up 1 1/16, or 8.8%, at 13 1/4. Inktomi shares, also getting a boost from a smaller-than-expected second-quarter

loss, were up 16 5/16, or 13.7%, at 135 1/2.

SpeedUS.com

(SPDE)

also managed to race ahead after the Internet service provider signed a licensing deal with

America Online

(AOL)

.

The deal gives SpeedUS.com the right to integrate a customized version of Netscape Communicator 4.5 with its high-speed service. SpeedUS.com was last up 1 5/8, or 32.5%, at 6 5/8, and AOL was up 4 7/16, or 3%, at 148 5/16.