Shares of Amazon.com fell after hours on Wednesday after the online retailer beat earnings estimates but reported revenues that were beneath most analysts’ forecasts. InfoSpace reported that it is buying Go2Net, and VeriSign reported a surprise profit.
Stocks traded lower during the day, as investors remained unimpressed by even better than expected earnings reports. The ISDEX fell 12 to 771, but well above its intraday low of 749. The Nasdaq lost 41 to 3987, but up 80 points from its low for the day. The Dow and S&P 500 ended at their lows of the day, the final drop coming on index rebalancing as JDS Uniphase was added to the S&P 500. The S&P dropped 22 to 1452, and the Dow lost 183 to close at 10,516. Volume rose to 1.17 billion shares on the NYSE and 1.66 billion on the Nasdaq. Chip stocks were down 6%. Decliners led by 14 to 13 on the NYSE and 23 to 15 on the Nasdaq. The major economic reports for the week are the second-quarter Employment Cost Index tomorrow and the GDP on Friday. For earnings reports, visit our earnings calendar and reported earnings.
Amazon.com fell 2 to 35 5/8 in regular trading and fell another $2 after hours after reporting a second-quarter loss of 33 cents a share, 2 cents better than estimates. But revenues came in at $578 million, below estimates of $585 million. Analysts got in on the action even before the earnings came out. Lehman Brothers downgraded the stock from Buy to Neutral during the day, citing softness in key consumer metrics, substantial execution risks, and expensive valuation.
InfoSpace announced that it is buying Go2Net
for 1.82 shares for each share of GNET, valuing profitable GNET at about $87 a share based on Wednesday’s closing prices. InfoSpace also announced a second-quarter loss of 1 cent per share, a nickel better than estimates. Go2Net fell 1 9/16 to 60 9/16 in regular trading, and InfoSpace gained 1 7/16 to 47 3/4. InfoSpace fell to 40 after hours, and Go2Net rose to 68.
VeriSign reported earnings of 7 cents a share, 9 cents better than estimates. The stock declined 2 11/16 to 179 3/16 in regular trading and rose to 180 after hours.
VerticalNet reported earnings of 23 cents a share, 7 cents ahead of estimates. The stock fell to 54 after hours after slipping 5/8 to 56 3/4 in regular trading.
JDS Uniphase reported earnings of 14 cents a share, 2 cents better than expected. The stock rose 5 13/16 to 136 ahead of being added to the S&P, but slipped to 134 after earnings came out. The stock has been struggling to stay above its 130-131 breakout point.
WebMethods beat estimates by 3 cents with a 16-cent loss. The stock declined 8 1/8 to 133 1/8 in regular trading and slipped to 132 after hours. NBC Internet
reported a loss of 81 cents, 4 cents better than forecasts. The stock slipped 5/8 to 11 1/2 in regular trading and rose to 12 after hours.
Looksmart reported a second-quarter loss of 9 cents a share, 5 cents better than estimates. The stock fell 1 21/32 to 21 1/32 in regular trading and was unchanged after hours. Covad
beat estimates by 13 cents with an 86-cent loss. The stock declined 9/16 to 17 11/16 in regular trading and rose to 18 1/2 after hours.
Only a handful of net stocks that beat estimates after the close on Tuesday traded higher on Wednesday.
eBay fell 3 33/64 to 52 23/32 despite reporting earnings of 5 cents a share, 2 cents better than expected, and revenues that nearly doubled to $97.4 million. The only negative was that the company didn’t guide forward earnings higher, saying it was comfortable with estimates.
Vignette bea
t estimates by a penny with 1-cent earnings, but the stock dropped 5 to 38 5/8. ING Barings downgraded the stock to Buy from Strong Buy based on competitive concerns potential dependence on large deals.
AskJeeves was one of the few standouts, rising 4 7/16 to 21 7/16 after beating estimates by 4 cents with a 51-cent loss. First Union upgraded the firm to Strong Buy from Buy.
Marimba gained 2 11/16 to 24 3/4 after reporting earnings of 6 cents a share, 7 cents better than estimates. John Olsen of Cadence Design Systems was named president and CEO, replacing company co-founder Kim Polese, who is becoming chairman and chief strategy officer.
Art Technology Group gained 5 15/64 to 108 1/2 after reporting earnings of 4 cents a share, 7 cents better than estimates. The stock took investors on a wild ride, trading as high as 116 and as low as 96. Competitor Open Market
fell 7/8 to 7 after reporting second quarter earnings of 16 cents a share, 2 cents better than expected, and announcing the resignation of CEO Ron Matros. For more on the two companies, click here.
MarketWatch.com fell 13/16 to 16 3/8 after beating estimates by 12 cents with a 64-cent loss.
Modem Media fell 1 1/2 to 13 7/8 after reporting a second-quarter loss of 7 cents, 6 cents better than estimates. Robertson Stephens downgraded the stock to Buy from Strong Buy.
Rhythms NetConnections gained 1/4 to 15 after beating earnings by 12 cents with a second-quarter loss of $2 a share.
TicketMaster Online added 7/16 to 21 after beating estimates by 4 cents with a second-quarter 52-cent loss. Cheap Tickets
lost 1 to 12 1/8 after reporting second quarter earnings of 21 cents a share, a penny ahead of estimates.
USinternetworking fell 2 1/8 to 16 3/8 after beating estimates by a penny with a second-quarter loss of 43 cents.
New Focus reported a second-quarter loss of 13 cents, 3 cents better than expected, and announced a secondary offering of 3.5 million shares. The stock lost 30 5/16, or almost 20%, to 123 3/4.
@Plan slipped 3/16 to 6 7/8 after beating estimates by 3 cents with an 11-cent loss. Egghead.com
lost 1/4 to 2 21/32 after beating estimates by 6 cents with a 44-cent loss.
NetRatings fell 4 3/8 to 19 1/8 after matching estimates with a 4-cent loss. MyPoints.com
fell 2 to 14 15/16 after reporting a loss of 19 cents a share, 12 cents better than expected. InterNAP
fell 4 1/16 to 40 1/2 after beating estimates by a nickel with a 19-cent loss.
Mail.com added 23/32 to 9 after beating estimates by 3 cents with a 49-cent loss. Netegrity
lost 2 to 82 1/4 despite beating estimates by 2 cents with a 1-cent loss. Razorfish
fell 63/64 to 19 1/2 after beating estimates by a penny with 8-cent earnings.
DSET Corp. gained 6 1/4 to 32 3/8 after beating estimates by a nickel with 18-cent earnings.
DoubleClick slipped 1 1/8 to 35 1/2. The company named COO Kevin Ryan as its new CEO.
Some technical comments on the market: As we’ve said a few times since last Tuesday, this looks like a market that wants to go lower. Today the market largely fulfilled that promise, although it still has potential to go much lower. We’ll begin with the S&P 500. The index broke its bearish rising wedge on Monday; yesterday it rallied back exactly to the lower boundary of the wedge, and today it headed sharply lower. That action would seem to confirm the bearish pattern, with potential downside to 1361, wh
ere the wedge began in May. Next support is around 1440, and critical support is 1390, the index’s October 1998 uptrend line. A break of that trendline could carry the index to 1170 or lower, so we do not want to violate that line. To the upside, the lower boundary of the broken wedge is now around 1480. We turned back at 1476 yesterday. The ISDEX also may be forming a rising wedge, with the lower boundary at about 725; a break of that line could carry the ISDEX all the way back to 560, its May low. Below 725, 700 has proven strong support; a closing break of the index’s recent intraday low of 692 would be a warning sign. To the upside, there is 790 resistance, where the ISDEX turned back yesterday. Above that, the index turned back recently at 840, just below its 50% retracement level of 845. If Net stocks can get past 850 resistance, they could go to 880. The Nasdaq broke a bearish flag to the downside this morning, but managed a decent recovery. The index has declined steadily since breaking its bearish wedge just under 4100 on Monday. To the downside, the Nasdaq’s 200-day moving average is at 3867, and important recent support is 3820-3830. One observation: the Nasdaq’s rally turned back at its highest downtrend line, touching on the April highs of 5132 and 5070 and the recent 4289 high; watch that line for a sign the tech bear may be over, or that a rally may be failing. The Dow broke its trading range of 10,675-10,875 today, and then negated its recent breakout by falling below 10,620. The pattern would appear to indicate potential downside to 10,475. The upper boundary of the Dow’s bearish diamond pattern is 11,000, and the lower boundary is technically around 10,500 at this point, but we’ll continue to use 10,200-10,300 because of support in that range and the requirement of a 3% break of a major pattern. One final comment: we’ve had bearish rising wedges on the S&P 500 and 100, the Nasdaq and Nasdaq 100, the ISDEX, the banking index, the semiconductor index, and potentially the Dow, in addition to a number of individual stocks like PMC Sierra. The appearance of all these bearish signs at once raises caution flags, particularly heading into the seasonally weak August to October timeframe. That said, the indexes are oversold and due for a bounce here. Let’s hope it’s a strong one.
