RealTime IT News

Stocks Survive Microsoft

Microsoft tumbled 8% Friday on weakness in corporate spending, but the surprising thing was that the rest of the market finished well off its worst levels.

Microsoft beat estimates and raised guidance, but investors were unnerved because the results were largely driven by consumer demand.

Besides signaling potential weakness in corporate spending, analysts at RBC Capital said a big drop in deferred revenues could also mean that customers are purchasing only what they need from Microsoft instead of opting for multi-year subscription contracts. That could mean greater uncertainty and volatility for Microsoft's results, and it could also open the door for Linux and other competitors if customers aren't locked into Microsoft contracts.

The Nasdaq fell 19 to 1865, the S&P 500 lost 4 to 1028, and the Dow dropped 30 to 9582. Volume declined to 1.43 billion shares on the NYSE, but rose to 1.96 billion on the Nasdaq. Decliners led 18-13 on the NYSE, and 18-12 on the Nasdaq. Downside volume was 65% on the NYSE, and 71% on the Nasdaq. New highs-new lows were 107-10 on the NYSE, and 105-10 on the Nasdaq.

As usual, investors' response to earnings was wildly mixed.

Sohu , Extreme , Business Objects , Applied Micro , Digital Insight and Western Digital rose on their results.

Gateway , Scientific Atlanta , UTStarcom , JDS Uniphase , Nortel , VeriSign , Drugstore.com , TriQuint and Emulex fell on their results.

AT&T rose 4% on merger talks with BellSouth .

And Google may be planning an IPO.

Market Commentary: For our free daily market commentary and technical analysis, please visit the InternetStockReport.com home page at: