2HRS2GO: Bad news will pass quickly
You've heard the latest bad news by now.
Profit warnings from Computer Associates (NYSE: CA), BMC Software (Nasdaq: BMCS) and Entrust Technologies (Nasdaq: ENTU). Chip sector downgrades from Salomon Smith Barney.
No more Ray Lane and some more Larry Ellison from Oracle (Nasdaq: ORCL).
An article from the Wall Street Journal, suggesting that second half earnings growth will weaken as the economy feels the impact of the Federal Reserve's interest rate hikes. A report from Goldman Sachs guru Abby Joseph Cohen says the same thing.
Combine those news nuggets and you get the latest technology (read: Nasdaq, CA and other NYSE stocks notwithstanding) market, down as much as 84 points at one point this morning. You need Moses to provide a glimmer of hope in the Red Sea of ink that comprises the Nasdaq's list of top movers today.
Or maybe you just need Informix (Nasdaq: IFMX), which this week gave us an encouraging preview of what today's decliners have to look forward to.
Informix on Monday warned of a quarterly disappointment, which is bad enough. It's worse coming from a company with Informix's history of letdowns dating back to when it was considered a credible rival to Oracle in the database business. It's even worse when the company admits it's been moving too slow to adapt to the future, something you don't want to hear from a multibillion revenue company, let alone a smaller enterprise like Informix.
IFMX shares took their predictable pounding during Monday's short session. Yet today, just one session later, it's one of just two gainers this morning in the Nasdaq's top ten volume leaders.
The other positive in the early going was Worldcom (Nasdaq: WCOM), plagued by uncertainty in recent weeks because of the apparent failure of its attempt to buy Sprint (NYSE: FON).
Worldcom and Informix are defying the negative market trend because they've already suffered. And that's why at least some of the stocks succumbing to gravity today should bounce back relatively soon -- the bad news has been priced out immediately.
Oracle is down 8 percent today, Entrust down more than 53 percent. Yet the nature of their businesses hasn't changed one bit. Market demand, products, personnel -- they're still there, just as they were last week.
Granted, in the case of Oracle, losing the man largely credited for running a tight ship and reigning in his CEO's eccentricities doesn't do anything to soothe Wall Street analysts. But the fact that Ray Lane remains on the Oracle board seems to indicate his departure as president and COO was relatively amicable. And other moderating forces, such as CFO Jeff Henley, remain at Ellison's side.
CA and BMC might have genuine problems with their mainframe businesses, maybe because of questions about the next generation of System 390 mainframes from IBM (NYSE: IBM). But the reality is that mainframes, while still a large part of those companies' businesses, isn't their most important growth driver; anyone who invested in CA and BMC based on mainframes was kidding themselves.
As for those communications chip makers -- well, chip manufacturing has always been cyclical. It's hard to dispute the market's reaction today, assuming you concur with the Salomon report's conclusions.
Hey, you can't disagree with everything Wall Street does. But at least for today's software decliners, you can't worry too much either. 22GO>