Shares of Internet and technology companies soared on Monday despite concerns about earnings and cash burn rates.
The ISDEX gained 19 to 748, while the Nasdaq rose 129 to 3989, blasting through resistance at 3900 and 3982. The Dow climbed 108 points and the S&P 500 was up 21. However, volume decline to 920 million shares on the NYSE and 1.4 billion on the Nasdaq. Advancers edged decliners 15 to 13 on the Big Board and 20 to 19 on the Nasdaq. The economic calendar for the week is light, and the big news is likely to be the OPEC meeting and Oracle’s (Tuesday) and Micron Technology’s (Thursday) earnings reports.
Inktomi , up 12 13/16 to 138 1/4, RealNetworks
, up 6 13/16 to 52 11/16, Juniper Networks
, up 12 1/4 to 125 1/4, and Ariba
, up 7 1/2 to 81 5/8, powered the ISDEX higher. Ariba is nearing the top of its two-month trading range at 83.
Shares of AppNet Systems fell 5 to 34 1/16 after the company inadvertently announced that it had reached a deal to be acquired by Commerce One
, when in fact the companies are only in talks. The faulty release set the terms of the deal at 0.8 shares of CMRC for each share of APNT, or about $40 per APNT share. AppNet later confirmed that it is in discussions and with Commerce One, but added that significant issues remain unresolved.
Barron’s was at it again, with another article on dotcom cash burn rates. Companies that may run out of cash in the coming months include Netzee , down 3/4 to 6, Bluefly
, off 3/4 to 2 1/2, RoweCom
, down 15/32 to 5 1/4, CDnow
, down 5/32 to 2 29/32, drkoop.com
, unchanged at 1 7/8, Claimsnet.com
, off 5/8 to 3 3/8, Pilot Network Services
, down 1 5/8 to 11 3/8, US Search.com
, off 7/32 to 1 19/32, Streamline.com
, falling 3/8 to 2 3/4, Netivation.com
, off 1/4 to 2 3/16, Mortgage.com
, down 1/4 to 1 3/8, and PlanetRx.com
, off 1/2 to 2.
Shares of DoubleClick fell 1 43/64 to 36 13/16 after trading as low as 32 7/8. Robertson Stephens reduced revenue estimates on the company due to a difficult Internet advertising environment, and said the stock will likely move sideways for the next 3-6 months.
Shares of S1 Corp. fell 6 to 22 1/16 on a First Union Securities downgrade from Strong Buy to Buy. First Union cited increased price competition and reduced its price target from $150 to $35.
MicroStrategy rose 4 3/8 to 42 15/16 after the troubled company’s oft-rumored financing finally materialized. MicroStrategy said it raised $125 million through a convertible preferred stock sale.
Rhythms NetConnections fell 2 3/4 to 12 5/8 after Thomas Weisel downgraded the firm to Buy from Strong Buy and lowered its price target to $20, based on an increasingly competitive DSL market.
Shares of Exodus Communications continued to run up in advance of its 2-for-1 split after the close tomorrow. The stock rose 2 1/4 to 105 1/2, with an intraday high of 108 1/2.
Recent IPO Sonus Networks gained 14 to 113. The firm’s post-IPO quiet period ended today, and Goldman Sachs began coverage with a Buy.
Other strong Internet infrastructure issues included Corning , up 6 13/16 to 252 1/4, Sycamore Networks
, up 15 5/8 to 116, and SDL Inc.
, up 13 5/8 to 313 1/2.
Musicmaker.com , off 1/16 to 1 15/16, reached a deal with America Online
to end their interactive marketing agreement. Financial terms were not disclosed. AOL, off 5/16 to 54 3/8, announced plans to begin selling $250 TV
set-top boxes that will let users chat and send instant messages while watching TV. The service, to be called AOLTV, will debut in Phoenix, Sacramento, Baltimore and five other places to be determined in July.
Healtheon/WebMD announced an increase in the exchange ratio for its acquisition of Medical Manager
from 1.3 to 2.5. HLTH fell 2 23/64 to 14 1/2, while shares of MMGR gained 5 1/4 to 32 1/8.
ExciteAtHome Corp. gained 7/16 to 18 11/16 on news that AtHome Japan is launching a high-speed Internet service in the Tokyo metropolitan area and northern Kyushu.
Some technical comments on the market: The Nasdaq broke out of a two-week trading range today and took out resistance at 3982 in the process; based on the size of the trading range, the index should have another 100 points to the upside if we break through 4000, which would take us to our 50% Fibonacci retracement level of about 4100. However, I’d like to see greater breadth and higher volume behind this move. The same goes for the S&P 500, which is attempting to break out of the upper boundary of its bearish diamond pattern at 1480. I’d like to see a lot more volume behind that move, and a close above 1507, the 78.6% retracement level. On the downside, I’d watch the lower boundary of the bearish diamond pattern on the Dow, which we approached on Friday; that level is just under 10,400 (call it 10,375). A break of that line would be pretty bearish, and would set up a test of the base of the bearish descending triangle in the 10,200-10,300 range. A break of 10,200 would probably send us to about 9,500 on the Dow (the move predicted by the descending triangle), although a break of the diamond pattern would predict an ultimate downside of 8,400 or lower. A break of 10,775 to the upside would be bullish. The ISDEX is pretty much range-bound between 600 and 800. However, I’d watch 700 – the midpoint of our trading range – as support. A break of that number could be a sign that equilibrium is tipping to the downside.
