Economics, tech reports flatten Nasdaq

Investors digest Microsoft's antitrust settlement, dour economic news, and another batch of quarterly reports.

Larry Dignan
3 min read
Technology shares treaded water Friday as investors digested Microsoft's antitrust settlement, dour economic news, and another batch of quarterly reports.

The Dow Jones industrial average was up 59.64 points to 9,323.54, and the Nasdaq composite index fell 0.57 points to 1,745.73.

On the economic front, Wall Street was hit with another pair of reports. According to the Labor Department, the unemployment rate rose 5.4 percent in October from 4.9 percent in September. Employers cut 415,000 jobs.

A separate report shows that new orders for goods made at U.S. factories dropped sharply in September, according to the Commerce Department.

Led by large declines in orders for transportation, computer and electrical equipment, the value of U.S. factory orders in September fell 5.8 percent--the biggest drop since January--to a seasonally adjusted $313.15 billion, the Commerce Department said.

In the tech sector there were plenty of stocks to focus on, with trading mixed overall.

Shares of Microsoft slipped 44 cents to $61.40 after the company and the federal government settled their antitrust case. Wall Street analysts were blase about the deal, believing that Microsoft's earnings and revenue growth are the key factors for investors to watch.

Rivals of Microsoft were mixed. Sun Microsystems gained 60 cents to $11.44, and Oracle gained 28 cents to $14.45.

A few other key stocks to watch:

 Activision gained 66 cents, or 1.7 percent, to $38.95 after Goldman Sachs started coverage of the interactive game maker. Goldman gave Activision a "market outperformer" rating and a price target of $47.

 BEA Systems shares were up 91 cents to $12.61 despite a downgrade from Credit Suisse First Boston, a profit warning and layoffs. The company on Thursday said it would cut up to 10 percent of its work force and trim its third- and fourth-quarter outlooks. The warning wasn't completely unexpected.

"BEA is a leader in its market," said Sanford C. Bernstein analyst Charles Dibona. "We believe this is a short-term issue instead of a fundamental one."

 Computer Sciences shares surged $6.14, or 18 percent, to $40.08 after the company?s Thursday report of better-than-expected second-quarter earnings of 40 cents a share. Analysts viewed the earnings as a sign of a turnaround.

 Homestore.com shares collapsed Friday, falling 54 percent, or $2.71, to $2.28. The company on Thursday reported a third-quarter net loss of 96 cents a share, which wasn't surprising considering it had already warned. However, online advertising revenue fell 44 percent from the second quarter.

Homestore, an online realty company, was among the few dot-com companies doing well until recently.

"Visibility is poor, and based on the magnitude of the shortfall, we're slashing estimates again," said Merrill Lynch analyst Henry Blodget. "The company again attributed the advertising shortfall largely to Sept. 11. This remains implausible in our opinion."

 Shares of Juniper Networks fell $2.44, or 11 percent, to $19.48, and shares of Ciena dipped $1.37, or 8 percent, to $15.09. Wall Street analysts blamed the decline on worries of a continued spending weakness in telecommunications capital equipment. Cisco Systems, which will report earnings Monday, fell 40 cents to $17.26.

 Priceline.com shares gained 10 cents to $4.50 after the company on Thursday topped estimates with a profit of 3 cents a share for the third quarter and expressed optimism about future quarters. "Priceline's results reaffirm our belief that the company will be profitable in each quarter of 2002, barring any unforeseen circumstances," said Thomas Underwood, a Legg Mason analyst.

Staff and Reuters contributed to this report.