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Techs come back to life
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April 6, 2000: 6:18 p.m. ET
Bargain hunters buoy sector; Yahoo! misses rally after earnings surprise
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NEW YORK (CNNfn) - After suffering through several brutal bouts of selling, technology shares regained some of their vigor Thursday as investors snapped up some of the bargains created by the week's earlier slide.
"Tech stocks are on the sale rack," said David Sowerby, portfolio manager and strategist at Loomis Sayles in Detroit. "Unequivocally, investors are bargain-hunting."
The tech-rich Nasdaq composite index, ended Thursday's session up 98.35 at 4,267.57, a 2.36 percent gain on the day. Even so, Thursday's gains did little to erase the week's earlier losses, and the index stood 17 percent below its high of 5,132.52 set last month.
Biotechnology stocks, lifted by a promising development in mapping the human genome, were among the Nasdaq's star performers, with Internet stocks, semiconductor and computer hardware makers posting solid gains as well.
Yahoo! misses rally
But sharp losses in shares of Yahoo! (YHOO: Research, Estimates) put a damper on some of the tech sector's gains.
Yahoo! shares, which rallied briefly just after the open, went on a downward slide for the rest of the day, ending the session down 11-9/16 at 154, a 7 percent decline on the day.
The Internet bellwether on Wednesday reported first-quarter earnings that were slightly ahead of analysts' forecasts, on revenue that more than doubled from the same period a year earlier.
But at 10 cents per diluted share, Yahoo! beat the Street's expectations by just a penny, which may have disappointed some investors who were anticipating an even greater upside surprise, according to Arthur Newman, an analyst at Schroder & Co. in New York.
"In the past, they have beaten earnings estimates somewhat spectacularly," Newman said.
And Thursday's trading activity reflects what has become a pattern for Yahoo! shares in post-earnings sessions, Newman noted. "If you look back over the past two years, seven out of the eight times they reported earnings, the stock went down the next day," he said.
Looking ahead, Newman said he expects Yahoo! shares could go as high as 300 over the next 12-to-18 months, but he expects to see continued volatility in the stock as it moves toward those levels.
 Yahoo! shares have been quite volatile in recent weeks, due in part to unconfirmed reports that the company is in merger talks with online auctioneer eBay (EBAY: Research, Estimates).
In an interview on CNNfn's In the Money program Thursday, Tim Koogle, Yahoo! chairman and chief executive, declined to comment specifically on those reports. But he did say that the company would continue to evaluate acquisitions that are either accretive or neutral to earnings. [241K WAV or 241K AIFF]
Analysts adjust their outlooks
Several Wall Street brokerages weighed in on Yahoo! Thursday, including Morgan Stanley Dean Witter, Donaldson Lufkin, Credit Suisse First Boston and Chase H&Q, among others.
Morgan Stanley's Internet sharpshooter, Mary Meeker, said Yahoo!'s "key metrics were awesome again," prompting her to reiterate her "outperform" rating on the stock and to raise her 2000 revenue outlook by 8 percent to $1.025 billion.
DLJ analyst Jamie Kiggen raised his 2000 earnings estimate for Yahoo! to 44 cents per share from 39 cents.
Chase H&Q, who reiterated his "buy" rating on the stock, boosted Yahoo!'s 2000 EPS view to 45 cents from 38 cents, and raised his 2001 EPS forecast to 56 cents from 49 cents.
Lisa Buyer at Credit Suisse First Boston reiterated her "buy" recommendation on Yahoo! and raised EPS estimates for the second quarter to 10 cents from 9 cents, and upped 2000 EPS views to 44 cents from 39 cents.
"Yahoo! is off to a roaring start in 2000," Buyer wrote in a research note. "Yahoo! reported another in a long series of very strong quarterly reports. The company showed sequential revenue growth of 14 percent and EPS growth of 9 percent over a very strong 1999 fourth quarter."
Other dot.coms head higher; semis follow
Meanwhile, the broader Internet segment headed mostly higher Thursday. The Dow Jones composite Internet index ended the session up 21.61 at 356.62, a 6.5 percent rise on the day.
 Among the day's biggest dot.com winners was European online auction site QXL.com, which soared 29-5/8, or 133 percent, to 51-31/32. SG Cowen initiated coverage on the company Thursday with a "strong buy" and set a lofty 24-month price target.
Jupiter Communications (JPTR: Research, Estimates), a research firm focused on Internet commerce, rose 10-9/16 to 32-13/16, a 47.5 percent gain on the day. The company said Thursday that it expects to report first-quarter revenue of $16.5 million, up 175 percent from the corresponding period last year.
Infospace.com (INSP: Research, Estimates) added 19-7/8 to 125, an 18.9 percent gain. Network Solutions (NSOL: Research, Estimates) shares soared 23-11/16, or 16.8 percent to 164-5/8. Spyglass (SPYG: Research, Estimates) shares rose 7-5/16 to 58-7/16, a 14.3 percent gain. Earthweb (EWBX: Research, Estimates) shares ended 2-3/16 higher at 53-5/16, a 4.3 percent gain on the day. eBay (EBAY: Research, Estimates) shares rose 16-1/16, or 9.7 percent, to 182. eToys rose 1-15/16 to finish 26.7 percent higher at 9-3/16.
Salon.com shares missed out on Thursday's rally after the company warned on Wednesday that it will experience a wider-than-expected quarterly loss and a decline in revenue for its most recent quarter. Shares ended Thursday's session 23/32 lower at 3-11/32, a 17.7 percent decline on the day.
Meanwhile, semiconductor issues gained momentum Thursday. The Philadelphia Stock Exchange's semiconductor index, or Soxx, added 21.81 to 1156.57, a 1.9 percent rise on the day.
Shares of Triquint (TQNT: Research, Estimates) ended the session 9-7/16 higher at 80-5/16, a 13.3 percent rise on the day.
Conexant Systems (CNXT: Research, Estimates) rose 4-15/16, or 7.8 percent, to 68-1/8. Warburg Dillon Read analyst Gregory Mischou raised his rating on the company to "strong buy" from "buy" and maintained a 12-month price target of 105. "We believe the recent weakness in Conexant stock presents an excellent buying opportunity," Mischou wrote in a research report.
 National Semiconductor (NSM: Research, Estimates) rose 6-7/16 to 64-9/16, an 11 percent rise on the day. Mishou also raised his rating on National to "strong buy" from "buy," and maintained its 12-month price target of 100, saying he is "increasingly enthusiastic about the growth prospects for National Semiconductor."
Mishou also helped boost Texas Instruments (TXN: Research, Estimates) stock rating, which were up 10 at 160, a 6.7 percent gain on the day.
Mischou raised his rating on TI to "strong buy" from "buy," and set a 12-month price target of 240.
Applied Materials (AMAT: Research, Estimates), which makes the equipment used to manufacture semiconductors, rose 2-1/2, or 2.4 percent, to 106-11/16. James Morgan, chairman and chief executive of the firm, said demand for semiconductor manufacturing equipment has surged during the past two months and said the company is on target to meet its forecast of second-quarter revenue of $2 billion and earnings per share of 50-to-54 cents.
Goldman names "super seven"
Goldman Sachs on Thursday released a list of seven stocks that analysts there said they prefer in a volatile market.
The seven include electronic commerce and payment services company First Data (FDC: Research, Estimates), up 2-5/8 at 45-3/8, a 6.1 percent gain; software company Oracle (ORCL: Research, Estimates), which added 3-15/16, or 5 percent, to 82-3/16; and electronic systems maker Teradyne (TER: Research, Estimates), which ended Thursday's session up 9-/14 at 96-1/4, a 10.6 percent gain on the day.
In selecting its list of tech stocks, Goldman analysts focused on companies large cap companies that it perceives as safer investments in the current market environment, according to Rick Sherlund, who heads up Goldman's technology team.
"We picked the stocks that we thought had the biggest market cap, the strongest fundamentals, and importantly, a lot of liquidity, so you can get in and you can get out," Sherlund said in an interview on CNNfn's Street Sweep program Thursday. [100K WAV or 100K AIFF]
Also on Goldman's list were: communications chip maker PMC-Sierra (PMCS: Research, Estimates), up 14-3/16 at 185, an 8.3 percent gain on the day; data storage systems maker EMC (EMC: Research, Estimates), which ended the session 6-1/2, or 5.1 percent, higher at 133; computer networking equipment maker Cisco Systems (CSCO: Research, Estimates), which edged down 5/16 to 71-13/16; and personal computer maker Dell Computer (DELL: Research, Estimates), which also slid ending 2-11/32 lower at 51-9/16, a 4.4 percent decline on the day. 
-- from staff and wire reports
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