RealTime IT News

Nets Rise, Inktomi Falls

Internet stocks rose Monday morning, but Inktomi became the latest high-profile Internet stock to suffer a big drop.

The ISDEX gained 2 to 709, and the Nasdaq gained 35 to 3880, briefly trading above 3900. The Dow rose 124 to 10,528 and the S&P climbed 11 to 1453. Volume rose slightly on the NYSE to 400 million shares, but declined on the Nasdaq to 595 million shares. Advancers led decliners by 13 to 12 on the NYSE and 19 to 16 on the Nasdaq. The Federal Reserve meets Tuesday and Wednesday, and most analysts expect no change in interest rates.

Shares of Inktomi weighed on the ISDEX, losing 25 1/8 to 115 1/4. Yahoo! will use Google instead of Inktomi for general Internet search queries. However, Inktomi officials said Yahoo! represents only 2% of the company's revenues. And Inktomi was selected as the premier search provider for Yahoo's new Corporate Yahoo! service. Other companies selected for the new corporate service include Critical Path , Netegrity , TIBCO , Citrix Systems and Hewlett-Packard . Critical Path gained 1 7/16 to 51 3/8 and Netegrity added 1 1/2 to 65 1/4. But Yahoo! fell 6 15/16 to 118 3/8; critical support is 111-112.

Shares of Scient fell 7 1/16 to 40 on a Banc of America downgrade from Buy to Market Perform after two of Scient's customers filed for bankruptcy.

Shares of HomeGrocer.com fell 1 3/32 to 7 on news that it will be bought out by Webvan , off 1 11/32 to 7 3/8. The all-stock deal will give HomeGrocer shareholders 1.076 shares of Webvan for each share of HOMG. Both stocks had run up recently on news that Webvan expects to exceed Wall Street expectations in its upcoming earnings report.

Akamai gained 5 25/32 to 108 9/32 on word that the company's results will exceed expectations.

WebTrends , up 2 1/4 to 38 13/16, and Vignette , up 3 9/16 to 44 11/16, gained on news that Vignette will offer integration between WebTrends' eBusiness Intelligence solutions and Vignette's V/5 Platform.

Radware gained 1 11/16 to 27 7/16 on news of an alliance with Compaq . Intraware climbed 1 1/16 to 19 1/8 on news of an alliance with Hewlett-Packard.

Friday's hot IPO Accelerated Networks added 13 to 60 7/8, down from an intraday high of 67. Fiber Optics plays returned to form. Corning added 13 1/14 to 253 5/16 and SDL Inc. rose 8 7/16 to 275 3/4.

Some technical comments on the market: A positive day, but caution remains the watchword. We had a key reversal in the Nasdaq on Thursday and broke down out of a rising wedge on Friday; the bulls are going to have to get this index back above 4000 to restore confidence, and then take out 4073 soon after. To the downside, key support is 3725 and 3600 (3583). The S&P 500 also broke down out of a rising wedge. Upside resistance on that index is 1480, and the lower boundary of the SPX's bearish diamond is 1370. Internet leaders have suffered visible losses recently, and the ISDEX is near critical support at 700; a clean break of that number would tip the balance to the downside for Net stocks, with room to 600. A break to the upside through 790 would be bullish. The weak break of the Dow's bearish diamond pattern at 10,382 has left room for a rally there. A break of 10,600 could give the old economy stocks room to the upper boundary of the diamond at 10,750. The Dow diamond should not be considered definitively broken until we close below 10,070 on rising volume (3% beyond the boundary of the pattern); if we get that break, the downside target called for by the pattern would be 8,400 or lower.