AOL, Inktomi Lead Parade Of Net Stocks Beating Estimates

America Online and Inktomi were among Internet stocks reporting better-than-expected earnings after the close on Thursday. Sun Microsystems also beat earnings estimates and traded 5% higher in after-hours trading.

Traders bid stocks higher during the day after Fed Chairman Alan Greenspan said demand may be moving more in line with growth, signaling that the end of the Fed’s rate hike cycle may be near. The ISDEX bolted 41 to 830, and the Nasdaq gained 128 to 4184. The S&P 500 climbed 13 to 1495 and the Dow gained 147 to 10,843. Volume rose more than 10%, to 1.06 billion shares on the NYSE and 1.7 billion on the Nasdaq. Advancing issues led 16 to 11 on the NYSE and 22 to 17 on the Nasdaq. For earnings reports, visit our earnings calendar and reported earnings.

America Online announced fourth-quarter earnings of 13 cents a share, 2 cents better than expected. Revenues came in at the lower end of expectations at $1.93 billion, but advertising revenues were strong. The stock rose 2 3/8 to 61 3/4 ahead of the report, but slipped to 59 in after-hours trading.

Inktomi reported third-quarter earnings of 4 cents a share, 2 cents ahead of expectations. The stock gained 6 3/8 to 129 7/16 in regular trading, and traded down slightly to 129 after hours.

Alteon Websystems crushed earnings estimates, reporting fourth-quarter earnings of 17 cents a share, 14 cents better than expected. Alteon also said it will buy Pharsalia for $221 million in stock. Alteon gained 17 3/16 to 134 5/16 in regular trading and added another $10 after hours.

Phone.com also beat estimates handily, reporting a fourth-quarter loss of 10 cents a share, 9 cents better than expected. The stock gained 3 11/16 to 88 3/8 in regular trading and rose to 92 after hours.

BroadVision rose 4 9/16 to 45 3/8 in regular trading, but slipped to 44 in after-hours trading after reporting earnings of 4 cents a share, two cents better than expected. CNET reported second-quarter earnings of 3 cents a share, 2 cents better than expected. The stock rose 2 11/16 to 32 3/8 in regular trading and was unchanged after hours.

Media Metrix reported a second quarter loss of 10 cents a share, a penny better than estimates. The stock rose 11/32 to 39 11/32 ahead of the report but did not trade after hours. Autoweb posted a second-quarter loss of 13 cents, four cents better than expected. The stock traded slightly lower after rising 9/32 to 2 19/32 ahead of the report.

Handspring reported a fourth-quarter loss of 13 cents a share, 6 cents better than expected. The stock rose to 41 after the report, after rising 11/32 to 39 11/32 in regular trading. Scient announced earnings of 6 cents a share, a penny ahead of estimates. The stock, which rose 2 1/16 to 62 7/16 ahead of the report, slipped a point after hours.

Unlike the previous two days, companies that beat earnings estimates after the bell on Wednesday actually rose in Thursday’s trading session.

One exception was [email protected] , which declined 1 3/16 to 17 13/16. The company reported a second-quarter loss of 11 cents a share, a penny better than expected, but revenue came in lighter than expected. Merrill Lynch downgraded the stock from Buy to Accumulate.

Exodus Communications rose 7 11/16 to 58 1/2 after reporting a second-quarter loss of 10 cents, 2 cents better than expected, and revenues also beat estimates. Chase H&Q upgraded the stock from Buy to Strong Buy.

PurchasePro.com gained 7 3/16 to 49 11/16 after reporting a second-quarter loss of 22 cents a share, 8 cents better than expect

ed. Check Point Software rose 18 3/8 to 243 1/4 on second-quarter earnings of 50 cents a share, 8 cents better than expected. About.com added 6 31/32 to 35 7/32 after reporting a second-quarter loss of 33 cents a share, 6 cents better than analysts expected.

E.piphany gained 2 3/32 to 123 19/32 after reporting a second-quarter loss of 12 cents, 15 cents better than expected. Critical Path gained 6 9/32 to 69 27/32 after beating estimates by 2 cents with a 34-cent loss. Critical Path had initially declined on concern about layoffs the company announced.

Extreme Networks reported fourth-quarter earnings of 9 cents a share, 14 cents better than estimates, and declared a 2-for-1 stock split. The stock soared 31 3/16 to 147 3/16. Morgan Stanley made bullish comments on the stock and raised its price target from $125 to $200.

LifeMinders.com added 17/32 to 29 31/32 on a second-quarter loss of 51 cents a share, 6 cents ahead of estimates. Netro rose 13 1/32 to 76 11/32 on news of a 2-cent loss, a nickel better than estimates. Netopia gained 17/32 to 47 7/32 on earnings of 12 cents a share, 2 cents better than analysts expected. EarthWeb was one of the few to trade lower, declining 21/32 to 15 27/32 on news of a 60-cent loss, 10 cents better than expected.

CDnow rose 1/32 to 2 29/32 on news that the company will be acquired by German media group Bertelsmann AG for $3 a share. The cash-strapped company has been looking for a merger partner for some time.

JDS Uniphase soared 20 5/16 to 127 1/16 on news that the firm will be added to the S&P 500. Goldman Sachs began coverage with a Recommended List rating, calling it a core holding for technology investors.

USinternetworking added 1 15/16 to 21 5/16 on news that the company has secured $175 million in commercial credit facilities to enable higher customer growth rates.

Multex.com gained 5 25/32 to 29 7/32 on news of a $30 million investment from the Munder NetNet Fund.

Some technical comments on the market: We said we might get a rally today, and we did. However, all the gains came in the first hour of trading and the indexes spent the rest of the day consolidating. The Dow got past previous resistance in the 10,850-10863 range, only to turn back down at 10,874. The S&P 500 never got back to its high of 1501 reached early in the day. The Nasdaq, however, finished right at its high of the day, a good sign for tech stocks. If the market can push convincingly through this resistance on the Dow and S&P, we could challenge the upper boundaries, respectively, of the Dow’s diamond pattern (11,000), the S&P 500’s large rising wedge (1520), and the Nasdaq’s large rising wedge (4300). To the downside, critical levels are the lower boundaries of the Nasdaq’s and S&P’s rising wedges at 4050 and 1470, respectively. The fact that the Nasdaq turned up right at the lower boundary of its rising wedge (4050) served to reinforce that pattern, so we continue to have a larger bearish backdrop against today’s positive action. A break of 4050 could send the Nasdaq all the way back to 3042, where the wedge began. The ISDEX also rebounded at key support (790), preserving its recent breakout. The ISDEX also finished at its high for the day (830). 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. So what happened to the smaller rising wedge that the S&P 500 broke the other day? The lines have continued to rise, and to negate the breakdown, the S&P would have to move quickly above 1520, the boundary of the larger wedge. That larger wedge is the more important pattern, obviously, and has a lower boundary of ab

out 1470, which should provide some support, so we will use that larger pattern to set our critical levels on the S&P. One positive: IBM appears to have negated its recent breakdown out of a symmetrical triangle/diamond pattern, and has just as quickly moved to the upper boundary. Could a breakout for Big Blue be in the works?

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