STOCKS TO WATCH: Cisco, CheckFree, Red Hat and 24/7 Media and WinStar

Cisco topped analysts' estimates in its fourth quarter Tuesday, raking in $727 million, or 21 cents a share, on sales of $3.55 billion.

First Call consensus expected the network-equipment maker to earn 20 cents a share in the quarter.

For the year, Cisco earned $2.55 billion, or 75 cents a share, on sales of $12.15 billion. That's a 43 percent jump versus fiscal 1998 when it made $1.88 billion, or 58 cents a share, on sales of $8.49 billion.

On Monday, Cisco announced plans to invest $1 billion in KPMG Consulting's Internet services business to deliver Internet-based services for telecommunication and enterprise markets. On Tuesday, Lucent announced it would acquire International Network Services for $3.7 billion.

The electronic payment specialist earned about as much as analysts predicted in the fourth quarter, but told Wall Street to expect losses in the current period.

CheckFree saw fiscal fourth quarter net income of $2.8 million, or 5 cents per share, not including one-time events. That was in line with the consensus estimate of 13 analysts surveyed by First Call.

But First Call had also predicted a break-even quarter for the fiscal first quarter, which ends September. CheckFree on Tuesday told analysts to expect a loss ranging between 8 and 10 cents a share, on revenue of $65 million to $70 million.

Fourth quarter revenue rose to $70.8 million from $63.5 million in the year-ago period, when CheckFree earned 3 cents per share. The company's subscriber base grew 6 percent to almost 3 million at the end of fiscal 1999, compared to 2.4 million a year earlier. Internet-based user growth was better than 20 percent.

Red Hat Inc. will make its debut Wednesday and the anti-Microsoft crowd is strongly behind its Red Hat Linux, an open source operating system that allows developers to make suggestions and amendments to the code.

By providing an alternative to the ubiquitous Windows operating system, Red Hat hopes to capture an audience that has long been disappointed with Microsoft's attention to detail and its systemic rigidity.

The company has essentially made its business selling free software with its Red Hat Linux. In regulatory filings, Red Hat said it represented approximately 56 percent of new license shipments of Linux-based server operating systems in 1998, according to International Data Corporation.

Wall Street heavyweight Goldman Sachs will serve as lead underwriter of the 6 million-share offering. It was originally priced at $10 to $12 a share, but was bumped to $12 to $14 a share Tuesday. Proceeds from the IPO will be used to provide working capital and for other general corporate purposes, including geographic expansion.

"This is a way to play the growth of Linux and open source software," said Paul Bard, an analyst at Renaissance Capital. "They're plan is to offer service and support for the Linux community and drive traffic and other revenue opportunities."

From a financial perspective, Red Hat's a much safer IPO bet than some of the other Internet and retailing companies that have gone public in the past month.

In the year ended Feb. 28, Red Hat reported a loss of $91,000, or 1 cent a share, on sales of $10.8 million. That's up from sales of only $5.1 million in 1998.

Red Hat also said its Web site had 265,000 unique visitors and approximately 2.5 million page views in March.

In its latest quarter, the Durham, N.C.-based company checked in with a loss of $2 million, or 9 cents a share, on sales of $2.7 million.

24/7 fell short of analysts' estimates in its second quarter Tuesday, losing $7.2 million, or 37 cents a share, on sales of $17.2 million.

First Call consensus pegged 24/7 for a loss of 35 cents a share in the quarter.

Its shares closed off 2 1/4 to 22 7/8 ahead of the earnings report.

Despite the larger-than-expected loss, 24/7 did enjoy tremendous sales growth compared to the year-ago period when it lost $10.1 million, or $1.17 a share, on sales of $3.9 million.

In the quarter, 24/7 delivered an aggregate of 2.5 billion ad impressions during the month of June, up 19 percent from 2.1 billion in March.

According to Media Metrix, the 24/7 Media networks reached 55.2 percent of all U.S. Internet users, and 34.5 million unique users visited one or more of 24/7 Media's Web sites in June 1999.

After falling to an all-time low of 69 5/8 in October, 24/7 shares raced up to a 52-week high of 69 5/8 in April.

All seven analysts following the stock maintain either a "buy" or "strong buy" recommendation.

First Call consensus expects it to lose $1.45 a share in the fiscal year.

In second quarter results released after market close Tuesday, the provider of wireless communications for business reported a net loss of $175 million, or $3.53 cents a share. Analyst consensus predicted a loss of $3.74 a share for the quarter ended June 30.

Second quarter revenue rose 72 percent year-over-year, to $97 million from $56 million. Internet connections made up more than 48 percent of WinStar's 69,000 lines installed in the seonc quarter. About 27 percent of WinStar's 453,000 lines are devoted to Internet access.

Overall gross margin and average monthly revenue per customer improved as WinStar sold more bundles of data services, the company said.

Shares of WinStar fell 1 3/4 to 46 in regular trading prior to Tuesday's report. Of 15 analysts polled by Zack's Investment Research, eight have the equivalent of "moderate buy" ratings on WinStar, and seven recommend the stock as a "strong buy".