Internets Slammed on Producer Price Hike
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U.S. markets were down across the board in midday trading Friday following news that the producer price index posted its biggest gain in nine years. Despite some better-than-expected earnings reports and rating upgrades, Internets were showing no immunity.
The government reported Friday the producer price index surged 1.1 percent and the core rate, which excludes volatile food and energy prices, rose 0.8 percent. Economists had predicted a 0.5 percent PPI climb and a 0.3 percent hike in the core rate.
That news had sent internet.com's Internet Stock Index falling 16.92, or 3.08 percent, to 531.71, the Nasdaq Composite had dove 50.05 to 2,756.79 and the Dow Jones industrial average had plunged 141.52 to 10,145.09.
One of the biggest losers was Theglobe.com (TGLO) which was off 2-5/8 to 11. The company warned investors Friday that two new products will be delayed, causing third-quarter sales to fall below expectations. However, officials said earnings are expected to come in at analysts' expectations of a 34-cent loss.
Most leaders were down, with America Online Inc. (AOL) off 4-7/16 to 110-9/16, Amazon.com Corp. (AMZN) had fallen 3-19/32 to 76, Ariba Inc. (ARBA) was down 5 to 158-1/2, Excite@Home (ATHM) was off 1-5/8 to 41-1/2, CMGI Inc. (CMGI) was down 6-3/16 to 98-1/16, eBay Inc. (EBAY) had slipped 4-1/2 to 137-1/8 and Yahoo! Inc. (YHOO) was off 3-5/16 to 170-1/16.
Internet Initiative Japan (IIJI) had fallen 2-3/4 to 49-5/8. The Japanese Internet provider said Friday second-quarter revenues are expected to beat estimates. However, its second-quarter foreign exchange loss is expected to climb as a result of a stronger-than-expected yen.
Starmedia (STRM) was off 2-7/8 to 32-5/16. The company Friday announced plans for a secondary offering of 6 million shares which have been priced at $34 each. Goldman Sachs will be the lead underwriter.
It wasn't all red ink, however. Leaders in the plus column included Sun Microsystems Inc. (SUNW) up 4-31/32 to 94-3/8. The workstation maker said first-quarter net income rose to 33 cents a share compared to 14 cents a share a year ago. Operating earnings rose to 39 cents, beating analysts' expectations of a 33-cent profit.
Broadcom Corp. (BRCM) was up 3-11/16 to 120-1/2. Morgan Stanley Friday upped its 1999 earnings per share estimates for Broadcom to 86 cents from 75. Also, CS First Boston increased its 1999 earnings estimates to 86 cents and forecast the company will earn $1.24 in fiscal year 2000.
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