2HRS2GO: Another round of reaffirming reports, another rally

COMMENTARY -- Do I repeat myself?

Do I repeat myself?

Sorry, but I'm just imitating Wall Street today. If nothing else, this morning's stock market performance reaffirms one credo: expectations were so low that all it took were solid-but-unspectacular quarterly reports to inject more than 200 points into the Nasdaq Composite Index.

You've seen this kind of ticker reaction in recent sessions. Intel (Nasdaq: INTC) reported a quarter described as "normal" by CFO Andy Bryant, predicted an okay-but-not-terrific holiday season, and that was enough to push INTC shares against a negative market tide yesterday. Gateway (NYSE: GTW) took off last week after merely meeting estimates and basically saying "Everything's on track."

Now you're seeing the market reacting the same way for the third time in less than a week; Microsoft (Nasdaq: MSFT) shot higher today, though the company's report last night was hardly more than a reiteration of previous guidance. Nothing bad, but also nothing outstanding.

In some ways the quarter was a slight letdown, particularly in Office 2000 sales. And you might have noticed that although Microsoft executives provided growth figures for workstation and desktop operating systems, they said little about Windows 2000 server other than to say that revenue rose.

The outlook wasn't inspiring. Microsoft CFO John Connors expects the company to earn "a few pennies" more than the full year consensus estimate of $1.88 per share, but that could be accomplished with merely in-line estimates for the rest of fiscal 2001, because Microsoft already beat per-share EPS expectations by a nickel in the first quarter.

Yet that's sufficient reason for a 15 percent gain in MSFT's price today, as far as shareholders are concerned. If nothing else, we know that Microsoft still matters in the minds of investors.

Sun Microsystems (Nasdaq: SUNW) and Nokia (NYSE: NOK) are seeing similar gains, on similar reports.

Server maker Sun posted strong revenue growth at the expense of margin improvements, but does that really surprise anyone following the Unix field? After all, we've already heard about disappointing server growth from IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HWP). In both cases they were company-specific problems, so someone had to be benefiting and Sun is obviously in the best position to do that.

Also worth noting is that SUNW shares, though down from their summer peak, held up reasonably well over the last couple of months compared to the rest of the tech sector. Sun was already valued highly, already priced for a strong quarter.

Nokia had taken a bit more of a hit on the NYSE since its July caution, but even then the company was predicting decent growth in 2001. This morning's conference call reemphasized the point, and the NOK stock led the entire wireless sector higher.

Perhaps investors just needed to hear everything at once. Give them the Not Bad News in bunches.

Granted, there are no guarantees that today's rally will be sustained for several sessions; previous ones certainly haven't in recent weeks and months. And you shouldn't say the overall market looks good, because blue chips are fading this afternoon even as the Nasdaq holds up. Until both sides of the stock picture are rising together, it can hardly be called a market rally. But that's not news either.

So forgive me if I have been repetitive lately, but repetition of previous statements seems to be working in the tech sector. At least for now. 22GO>