|Tech stocks fight off the blahs
NEW YORK (CBS.MW) - Tech stocks rose just above the flat line in early Thursday trading, following earnings from bellwethers including Apple Computer and AMD, and ahead of Microsoft's earnings report after the close.
Anthrax scares continued to threaten market gains. On Thursday, an employee in the office of CBS News' Dan Rather tested positive for exposure to the anthrax bacteria. A full recovery is expected, with help from antibiotics.
Economic news also put a damper on the U.S. market. Weekly initial jobless claims rose 6,000 to 490,000, an 18-year high. The four-week average of initial claims rose by 24,250 to 491,250, the highest in more than 10 years.
"The only reason you're buying tech stocks today is to get ahead of the economy," said Jim Grefenstette, fund manager with Federated Investors in Pittsburgh. "The fundamentals still look lousy. But the market is looking ahead. I believe we'll hold an economic rebound in the first quarter of next year, due to changes in industrial production and monetary policy."
The Nasdaq Composite ($COMPQ) rose 7.14 points, or 0.4 percent, to 1,653.48. Shares of Cisco Systems, Oracle Corp. and JDS Uniphase moved higher, while Intel and Juniper Networks shares slipped. The large-cap Nasdaq 100 Index ($NDX) rose 1.1 percent.
Investors bid down many of the semiconductor stocks following earnings from several high profile chipmakers.
Texas Instruments (TXN) shares lost 6 percent in early trading. The company, which makes most of the chips used in wireless phones, reported a narrower-than-expected third-quarter loss, but said it expects a greater loss in the fourth quarter as revenue hits bottom.
Dallas-based TI, which had maintained revenue and loss estimates since the second quarter, posted a net loss of $117 million, or 7 cents a share, vs. net income of $676 million, or 38 cents a share, in the third quarter of 2000.
Excluding one-time items, TI reported a loss from operations of $57 million, or 3 cents a share, vs. a profit of $589 million, or 33 cents a share, in the year-ago period. Analysts polled by Thomson Financial/First Call expected the loss to average 4 cents a share.
Advanced Micro Devices (AMD) managed a slight gain. The company reported a net loss for the third quarter on Wednesday, reversing last year's profits, as the maker of PC microprocessors struggled against price declines and a slowing economy.
Jerry Sanders, chairman and CEO of AMD, said during a conference call with analysts that competition from Intel (INTC) led to sharply lower average selling prices -- the chief culprit of weaker business in the quarter. Intel shares, meanwhile, slipped 27 cents to $24.30.
Networking chipmaker Broadcom's (BRCM) shares rose 4 percent, going against the grain of most chip stocks. The company reported late Wednesday a smaller-than-expected loss of 13 cents a share. Analysts surveyed by Thomson Financial/First Call had been anticipating losses of 15 cent a share. Revenue for the period was $213.6 million, down from $319.2 million recorded in the same period last year. Analyst Charlie Glavin at CS First Boston followed by upgrading the stock to "buy" from "hold."
Shares of Motorola (MOT), National Semiconductor (NSM) and Rambus (RMBS) also headed lower. The Philadelphia Semiconductor Index ($SOX) fell 1.1 percent.
Computer makers followed the chip sector lower. Shares of Dell Computer (DELL), Compaq (CPQ), Gateway (GTW) and Hewlett-Packard (HWP) lost ground, while Sun Microsystems (SUNW) shares stayed near breakeven.
Apple Computer (AAPL) outperformed the group, rising 7 percent following its earnings report Wednesday. The Mac and iMac computer maker said that its fiscal fourth quarter profit fell 61 percent and that it would likely miss sales targets in the current quarter because of a decline in consumer spending.
The Cupertino, Calif.-based company reported an adjusted net profit Wednesday of $66 million, or 19 cents a share, compared with last year's fiscal-fourth-quarter earnings of $170 million, or 47 cents a share. Analysts had expected Apple to earn 16 cents a share, on average, according to market research firm Thomson Financial/First Call.
The results included $1 million in investment gains. Excluding those gains, Apple's net profit would have been $65 million, or 18 cents a share.
Cisco shares (CSCO) rose 2 percent as the most actively traded U.S. stock, and Lucent shares rose. But the rest of the networking-equipment sector fell flat. Shares of closely followed Nortel Networks (NT) and France's Alcatel (ALA) lost ground. Redback Networks (RBAK) shares were hit hardest, down 10 percent. The Amex Networking Index ($NWX) lost 0.2 percent.
Software shares proved to be the best-performing tech sector, as shares of Microsoft (MSFT) and Oracle (ORCL) both rose. Shares of Veritas Software (VRTS) and BEA Systems (BEAS) each rose 5 percent. The Goldman Software Index ($GSO) rose 1.1 percent.
Europe's largest software maker SAP (SAP), however, lowered its sales target for 2001. U.S-traded shares of its stock dropped 6 percent.