STOCKS TO WATCH: Brocade, drkoop.com, Intel and Yahoo!

A privately-held company, Nishan, will "come out of the closet" the week of May 22nd with a technology that could blow Brocade out of the water, according to a report from U.S. Bancorp Piper Jaffray which downgrades the stock to "neutral."

Nishan's SoIP (storage over IP) initiative "could be one of the most significant changes in the industry during the next 5 years," according to the report.

The concept is: Fibre Channel is a relatively poor implementation vehicle for storage area networks with so much IP based networking available.

"Brocade's PEG multiple is almost 75 percent overvalued relative to the S&P 500...with weakening fundamentals and inflated valuations, can investors afford to ignore the writing on the wall?" stated analyst Ashok Kumar in the report.

Brocade closed down 7 3/8 to 110 1/4 Friday.

The Internet health information provider should be active after confirming late Friday that it had laid off more than a third of its workforce in the hopes of stemming the flow of red ink as well as making itself more attractive to a potential buyer.

Company officials said the massive downsizing began in early April. Workers were reduced through attrition, layoffs and termination of contractors and consultants, a spokeswoman said on Friday.

Last week, reports suggested drkoop.com was going to merge with Drug Emporium Inc.'s (Nasdaq: DEMP) unprofitable online unit. Neither company would comment on the possibility of a merger, but analysts said sweeping layoffs can indicate an acquisition is in the works.

Its shares closed up 5/32 to 2 1/2 Friday.

The chip-making giant will be worth watching after saying late Friday that it had revised its fiscal first-quarter earnings per share down by a penny and lowered sales by $28 million for a defective chipset that was in distribution at the time the flaw was discovered.

"What we did was revise downward by a penny a share the results from the first quarter for product in our own inventory and in the distribution channel," Intel spokesman Tom Waldrop told Reuters. "This is product not yet in the hands of end users. In addition we wrote down some of the inventory."

Waldrop said the revision, which was disclosed in a filing to the Securities and Exchange Commission earlier in the week, did not include the potential impact of replacing the motherboards, on which chips are mounted, to end-users. Intel reported first-quarter results on April 18.

The company has said the replacement of those faulty motherboards could cost Intel as much as a few hundred million dollars. The pretax impact of this week's revision on profit was $53 million, the company confirmed.

"This was reversing some revenue for product still in distribution, through our direct customers which include computer makers and motherboard makers and in the distribution channel itself," said Waldrop.

Intel shares finished off 6 1/16 to 117 7/8 Friday.

The maker of communications equipment warned that because of lower-than-expected orders and the delay of a significant order, the company expects to report second-quarter earnings per share of 11 cents, missing the 19-cent average estimate by First Call.

Performance Technologies rose 3/4 to 28 1/4 at Friday's close.

The company is expected to announce plans Monday to acquire Active Software Inc. (Nasdaq:ASWX ) in a stock deal valued at $1.3 billion the Wall Street Journal reported, citing people familiar with the matter. WebMethods closed at 87 while Active Software closed at 33 ahead of the news.

Yahoo! shares moved up 5/16 to 120 5/8 in after-hours trading Friday after the Securities and Exchange Commission said it may approve Yahoo's bid not to be regulated as a mutual fund unless the agency orders a hearing into the matter.

The Internet portal, which holds large investments in other companies, applied to the SEC in February for an exemption from the tighter investment restrictions it would have faced if it were an investment company.

Its shares closed off 11 11/16 to 130 5/16 in regular trading Friday.

Reuters contributed to this report.>