RealTime IT News

Merger News Not Enough To Boost Nets, Techs

Another Merger Monday failed to boost Internet and technology stocks, as investors sold shares ahead of quarterly earnings reports.

The ISDEX fell 18 to 719, the Nasdaq dropped 42 to 3980, and the S&P 500 declined 3 to 1475. The Dow gained 10 to 10,646 on strength in cyclical issues, but pulled back at the critical 10,700 level. Volume fell to 819 million shares on the NYSE and 1.39 billion on the Nasdaq. Advancing issues led 16 to 12 on the Big Board, but decliners led 21 to 19 on the Nasdaq.

Yahoo will kick off earnings season tomorrow after the close, and Ariba will follow on Wednesday. Juniper Networks will report on Thursday. The Producer Price Index for June will come out on Friday.

Yahoo fell 6 1/2 to 110, below key support at 111, after Merrill Lynch analyst Henry Blodget said he essentially sees no upside to tomorrow's earnings report. Yahoo is expected to report earnings of 10 cents per share, up 100% from a year ago. Blodget said he expects Yahoo's report to be "strong but slightly less robust than the first quarter," due to weakness in Internet advertising. Revenue is expected to grow 8% sequentially to $247 million, page views are expected to grow 7.5% to 672 million, and monthly unique visitors are expected to increase 9% to 157 million.

Shares of DoubleClick fell 4 1/4 to 31 11/16, reaching our downside target of $32 based on the stock's drop out of a descending triangle at $40 recently. The stock's 52-week low is 30 1/2. iWon has replaced DoubleClick with Engage for advertising services. Salomon Smith Barney defended DoubleClick, pointing out that iWon accounts for less than 4% of the company's revenues. Engage gained 1 1/8 to 13 3/16.

eBay fell 1 5/8 to 48 1/8, continuing its move below key support at 50, which it broke on Friday.

Fiber optics stocks rose after JDS Uniphase announced it will buy SDL for 3.8 shares of JDSU for each share of SDLI. SDLI rose 25 3/8 to 320 11/16, but down from a high of 396 reached in pre-market trading. JDSU fell 15 1/16 to 101 1/8, weighing on the Nasdaq and Nasdaq 100 indexes. Recent IPOs rose on the news, with Stratos Lightwave adding 3 1/4 to 35 3/16, New Focus bolting 17 5/32 to 98 21/32, and Avanex gaining 19 5/8 to 126 3/8. But fiber optics leader Corning fell 12 11/16 to 244.

Extreme Networks gained 10 3/4 to 112 on rumors that it would be acquired by Juniper , up 3/16 to 147 1/2.

Sycamore Networks gained 7 7/8 to 134 13/16, extending its gains after a $420 million contract win on Friday. Wit SoundView reiterated Strong Buy on the stock, and raised its price target from $150 to $170.

Phone.com gained 5 3/4 to 68 1/8 on bullish comments from SG Cowen. The stock has struggled around $70, despite positive comments from a number of brokerage firms.

Embarcadero Technologies gained 4 5/8 to 32 1/4 after announcing it is moving into the Asia/Pacific market.

NetZero gained 3/4 to 6 after Oracle CEO Larry Ellison and NIC announced an online store to sell the NIC, a $199 Net appliance, that includes NetZero's free Internet access.

NorthPoint Communications gained 1 3/4 to 12 13/16 on rumors that WorldCom may acquire the company. Covad , up 5/16 to 18 3/16, and Network Access , up 5/8 to 9 7/8, rose on that rumor and Legg Mason Buy ratings.