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A kinder, gentler Wall Street?

Wall Street's reputation for punishing companies that issue earnings warnings is tarnished, as shares of three tech companies climb even after investors are warned of revenue and profit shortfalls.

Wall Street's reputation for punishing companies that issue earnings warnings was tarnished in the past week as shares of three tech companies climbed even after investors were warned that revenue and profits will fall short of expectations.

In the past few days, shares of Net advertising company DoubleClick and chipmakers Intel and Advanced Micro Devices climbed after the companies issued warnings that would have decapitated the stocks a few weeks ago.

Although the circumstances are unique to the companies, some analysts say the reversal indicates investor pessimism has reached a nadir.

"I think it's kind of a response by the marketplace that maybe the tides are turning and maybe we're seeing the bottom," said Philip Dow, a market strategist with Dain Rauscher Wessels.

After Intel warned last week that fourth-quarter revenue would be flat instead of rising an expected 4 percent to 8 percent, the stock immediately climbed a confident 5 percent and gained another 10 percent the next day.

Shares of Intel rival AMD were in positive territory for much of the day Tuesday, despite the seemingly ominous news that AMD would miss revenue and profit estimates. The shares slipped in late trading, closing with a slight 6-cent loss at $17.25.

And Net advertising company DoubleClick was rewarded with a 16 percent boost Tuesday after confirming investor fears that slowed Internet advertising sales will cause it to report a profit and revenue shortfall.

Such reactions are a stark contrast to last quarter, when earnings warnings sent shares of Apple Computer, Eastman Kodak, and Intel spiraling down 20 percent to 50 percent.

The price climbs also stand out because they bucked the general market trend. The Nasdaq composite index was down 68 points, or about 2 percent, in late trading Tuesday. It has tumbled 23 percent in the past three months.

"The market is made up of people's thoughts on the future, and if you wait for the numbers to move up you miss out," Dow said. "I think it's kind of an anticipatory move."

Take Intel, for example. Several analysts believe investors saw this recent warning as the last in a spate of bad news. In other words, all the bad news has been factored into the price, indicating the stock has reached a bottom.

"Once the most negative news is out there, smart money usually moves in," said Sunil Sharma, a market analyst with Lehman Brothers. "The stock had corrected substantially, and for a company that's growing revenue and earnings, investors were willing to pay at that valuation."

It didn't hurt that Intel announced the next day it could make chips with roughly 400 million transistors--extending Moore's Law. Formulated by Intel co-founder Gordon Moore, the law states that the number of transistors a chip can hold will double every 18 to 24 months, as transistor size shrinks.

In DoubleClick's case, analysts say the market devalued the stock after a poor earnings report from competitor Engage and after an earlier announcement by DoubleClick of layoffs.

"These two events announced to the market that everything isn't so rosy at DoubleClick" said Vik Mehta, an analyst at Goldman Sachs. "Investors had already priced that into the stock. They ended up focusing on what is coming 12 months out."

The fact that the warnings did not spark selling stampedes may be one more bit of positive news for investors looking for a reason to get back into the market. Stocks recently surged on anticipation that the Federal Reserve may start to lower interest rates and that the end to the presidential election morass is near.

"I think people might have a little bit of confidence restored that this economic recovery is going to continue, and then you get another kind of more positive psychology," Dow said.