Akamai, FreeMarkets and GoTo.com were the latest Internet companies to beat earnings estimates yet see their shares slip. Priceline.com fell to a new low in the regular trading session.
The ISDEX fell 37 to 764, negating its recent breakout at 790, and the Nasdaq fell 113 to 3981, back below 4000. The S&P lost 15 to 1464, and the Dow declined 48 to 10,684, buoyed by strength in Merck. Volume declined to 872 million shares on the NYSE and 1.46 billion on the Nasdaq. Declining issues led 17 to 11 on the NYSE and by a 2-to-1 margin for the second day in a row on the Nasdaq. The major economic reports for the week are the second-quarter Employment Cost Index on Thursday and the GDP on Friday. eBay reports earnings after the close tomorrow.
Akamai Technologies reported a second-quarter loss of 50 cents a share after the bell, 7 cents better than estimates. But the stock slipped to 105 in after-hours trading, after falling 9 1/8 to 107 7/8 in the regular trading session.
GoTo.com reported a second-quarter loss of 23 cents, 8 cents better than estimates. But after rising 2 15/16 to 20 1/8 in regular trading on news of a deal with CompuServe, the stock retreated to 19 1/2 after hours.
FreeMarkets added 1 1/4 to 53 1/2 in regular trading, but fell to 51 after hours after the company reported a second-quarter loss of 34 cents a share, 7 cents better than estimates. MP3.com
beat estimates by a nickel with a second quarter loss of 8 cents a share. The stock, which ended the day down 1/16 to 12 1/16, traded just under 12 after hours.
Shares of Red Hat slipped $1 after hours on news that CEO Harold Covert has resigned. The stock ended regular trading down 1 9/16 to 23 3/4.
Priceline.com led Internet shares lower during regular trading, falling 9 to 31 1/16, a new low. The company reported a first-quarter loss of 1 cent a share, 2 cents better than expected, and revenues rose more than 200% to $352 million. The company lost 10 cents in the year-ago quarter. Merrill Lynch said the company appears to be headed for profitability, but investors were unimpressed by the company’s sequential growth of 12%.
CMGI fell 3 3/16 to 38 9/16 after Wit SoundView maintained its fourth-quarter revenue estimate of $373 million, but raised operating expense estimates from $651 million to $911 million and lowered its fourth-quarter loss estimates from $1.57 to $2.45. Wit maintained its Strong Buy rating on the company.
Internet infrastructure plays were strong on news of a potential $100 billion deal between Nortel and Corning
. Corning fell more than 10%, down 32 3/4 to 251, on news that Nortel may sell the company its optical parts unit in exchange for a greater than 50% stake in Corning. New Focus
, up 17 1/8 to 158 7/16 and EXFO
, up 5 1/4 to 84 1/2, were among the stocks rising on the news.
Tut Systems continued its move from a breakout on Friday on better-than-expected earnings, adding 10 3/16 to 95 11/16, but down from an intraday high of 99 1/2.
Two recent IPOs received positive comments from numerous brokerages as their post-IPO quite periods expired. Genuity declined 5/16 to 9 13/16, but Stratos Lightwave
gained 4 to 53.
ZDNet preannounced second quarter earnings that were a penny better than expected. The stock added 5/16 to 17 5/8, and CNET
, which is buying the company and parent Ziff-Davis
, added 5/16 to 31 1/8.
VerticalNet gained 1 5/16 to 56 11/16 on news of completed ventures with Softbank and British Telecom. Goldman Sachs made positive comments ahead of
the company’s earnings report on Wednesday.
EMusic.com gained 1/2 to 2 5/16 on news that it will launch a subscription service giving customers unlimited access to MP3s. Liquid Audio
gained 1 1/2 to 12 1/4 on news of an alliance with Napster.
TownPagesNet.com soared 1 1/4 to 3 1/4 on news that its BuyersGuide subsidiary will trade on the Alternative Investment Market of the London Stock Exchange starting August 7. The company raised $7.5 million at an offering price of 44 cents a share.
iBasis fell 4 1/16 to 25 3/16 despite a Kaufman Bros. upgrade from Accumulate to Buy based on valuation. InterWorld
gained 13/16 to 25 3/16 on a Robertson Stephens Buy rating based on the company’s strong results last week.
drkoop.com gave back 1/8 to 1 15/32 a day after receiving a merger offer from MilleniumHealth. For an interesting take on the offer, click here.
Some technical comments on the market: The market raised caution flags today in the form of trendline breaks on the Nasdaq and S&P 500. Both indexes broke their uptrend lines from May. The trendlines were also the lower boundaries of their bearish rising wedges that began at the same point, a sign of a bear market rally. The breaks give the indexes potential downside to where the wedges began, at 3042 on the Nasdaq and 1361 on the S&P. The Nasdaq broke its rising wedge by about 100 points, while the S&P 500 finished just under its boundary (1470). The S&P 500 is close enough to its lower boundary that it could rally back within the pattern, but the Nasdaq would need to get above 4100 quickly to negate its breakdown. The Nasdaq closed right on a support/resistance point (3982), so it could rally from here. Below 3950, support could be found in the 3900 range, but important recent support on the Nasdaq is at 3820-3830. Recent support on the S&P is at 1440, and critical support is at 1380. The ISDEX negated its recent breakout today, falling back below 790. The ISDEX could find some support at 725, a weak trendline from May. Below that, 700 has proven strong support; a break of that level could carry the ISDEX all the way down to 600. To the upside, 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 Dow is forming a 200-point trading range bound by 10,675-10,875. A break of either level should determine direction on the Dow. The index finished just above 10,675 today. The upper boundary of the Dow’s bearish diamond pattern is 11,000, and the lower boundary is 10,200-10,300.
