STOCKS TO WATCH: Applied Materials, Etec Systems, Barnesandnoble.com, Intel, N.E.T. and Rational

Both stocks will be worth keeping an eye on Thursday after Applied Materials agreed to buy Etec for $1.78 billion in stock.

Etec shares closed at 49 7/8 but soared up to 75 in after-hours trading.

Applied will issue 0.649 shares of its stock for every share of Etec, whose systems produce masks for printing circuit patterns on chip manufacturing wafers. Etec also makes imaging systems used for producing electronic interconnects.

The deal, to be accounted as a tax-free pooling of interests, must be approved by Etec shareholders and government regulators.

Executives from both companies said Etec's product line would fit with Applied, the world's largest maker of chip manufacturing equipment.

Etec lost $700,000 on revenue of $56.7 million, with gross margin of 39.8 percent, in its fiscal first quarter ended Oct. 31. The company in fiscal 1999 earned $1 million on sales of $237.2 million, compared to a profit of $46.8 million on revenue of $288.3 million in fiscal 1998.

Shares of Applied fell in after-hours trading to 124, down from its close of 127 1/16.

The online bookseller said Chief Executive Jonathan Bulkeley resigned. He plans to focus on his personal investments, such as QXL, a European Internet auction business.

Barnesandnoble.com, 40-percent-owned by Barnes & Noble Inc., said former Barnes and Noble Inc. Chief Operating Officer Steve Riggio will become vice chairman and acting CEO. Barnesandnoble.com fell 5/8 to 15 7/16.

The world's largest chipmaker hopes to reverse its recent earnings performance Thursday when it reports its fourth-quarter results.

Its shares closed up 1 9/16 to 91 1/4 Wednesday.

Intel's taken some bad press of late due to its alleged inability to manufacture enough chips and motherboards for Gateway Inc. (NYSE: GTW).

Analysts are expecting Intel to earn 63 cents a share in its fourth quarter.

Last quarter, Intel missed analysts' estimates, earning $1.9 billion, or 55 cents a share, on sales of $7.3 billion.

Company officials blamed the shortfall mainly on shrinking profit margins, a problem that doesn't appear to be going away anytime soon.

Intel hit a 52-week high of 89 1/2 in September.

It could get ugly Thursday for N.E.T. after it fell embarrassingly short of analysts' estimates in its third quarter, losing $20 million, or 93 cents a share, on sales of $51.2 million.

Its shares closed off 3/8 to 11 1/2 ahead of the earnings report.

First Call consensus expected the network-equipment maker to lose 18 cents a share in the quarter.

The $51.2 million in sales represents a 22 percent decline compared to the year-ago quarter when it lost $735,000, or 3 cents a share, on sales of $65.9 million.

Last quarter, Network Equipment Technologies lost $400,000, or 2 cents a share, on sales of $64.8 million.

Its shares moved up to a 52-week high of 14 13/16 in December after falling to a low of 7 5/16 in April.

Two of the three analysts' following the stock maintain "hold" recommendations.

Rational Software slipped past analysts' estimates in its third quarter Wednesday, earning $25.4 million, or 27 cents a share, on sales of $146.2 million.

First Call consensus was looking for a profit of 24 cents a share.

The $146.2 million in sales represents a 34 percent jump from the year ago period when Rational earned almost $18 million, or 20 cents a share, on sales of $109.3 million.

Rational saw large contract wins in several areas, including network infrastructure companies, makers of electronic devices and large companies that do business on the Internet.

Shares of Rational have nearly doubled in the past 12 months. The stock closed Wednesday's regular trading at 51 9/16, up 2 for the session.