Nortel Warns

Telecom equipment and networking stocks that soared during the day on Ciena's strong earnings came back to earth after hours when Nortel Networks warned.

The ISDEX http://www.wsrn.com/apps/ISDEX/ rose 10 to 362, and the Nasdaq climbed 61 to 2552. The S&P 500 added 10 to 1326, and the Dow rose 95 to 10,891. Volume was unchanged at 1.1 billion shares on the NYSE, and 2 billion on the Nasdaq. Advancers led 16 to 13 on the NYSE, and 22 to 15 on the Nasdaq. For earnings reports, visit our earnings calendar at http://www.wsrn.com/apps/earnings/internet.xpl and reported earnings at http://www.wsrn.com/apps/earnings/ireported.xpl. For after hours quotes and news, visit our after hours trading site at http://www.afterhourstrading.com.

Nortel plunged 6.50 to 23.25 after hours after warning that it will lose 4 cents a share, 20 cents below estimates. Nortel noted that it was now "seeing a faster and more severe economic downturn in the United States" than previously expected. Stocks that rose strongly during the day on Ciena's earnings fell after hours, among them Corning , Juniper , and Sycamore . Hewlett-Packard met estimates and traded slightly lower after hours. Dell missed estimates by a penny and also traded down slightly. Dell announced 4% layoffs during the day.

Ciena rose 12 3/8 to 89 during the day, but traded down to 85 after the Nortel warning. Ciena beat estimates by 3 cents with 18-cent earnings and raising forward guidance higher.

Also during the day, Critical Path , halted for two weeks on accounting irregularities, finally reopened and plunged 7 1/8 to 2 15/16. Fourth-quarter earnings will be revised from a loss of 16 cents to a loss of 27-30 cents, and an investigation is ongoing.

Wireless Facilities fell 4 3/4 to 26 after beating estimates by 2 cents with 24-cent earnings, but JP Morgan downgraded the company on earnings visibility concerns.

Amazon.com lost 1/8 to 14 5/16 on a Prudential Sell rating. Sell ratings are rare on Wall Street, but Amazon seems to collect them.

Check Point , up 4 11/16 to 94 7/8, and Internet Security Systems , up 8 7/16 to 77, received Strong Buy ratings from Lehman Brothers.

Broadcom , up 2 9/16 to 83 3/4, and Applied Micro , up 1 1/16 to 48 3/16, benefited from CIBC World Markets comments that communications chip companies had fallen below their long-term growth rates.

Openwave rose 2 5/16 to 59 1/2 on a CIBC Buy rating. Competitor Comverse , which won an AT&T Wireless contract yesterday, rose another 7 11/16 to 107 3/4.

Interwoven surged 5 13/16 to 25 7/8 on a Prudential Volpe Strong Buy rating.

Homestore.com rose 4 15/16 to 34 7/8 on news of market share gains and hopes that a Department of Justice investigation will soon end.

Loudeye slipped 1/4 to 2 1/32 despite beating estimates. iXL lost 5/16 to 1 3/4 after missing estimates. Rare Medium surged 5/8 to 2 15/16 on strong earnings. Deltathree.com was unchanged at 2 3/32 despite beating estimates.

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The Nasdaq gapped up above its