Tech Industry

MIDDAY MARKETS: Investors shrug off Cisco warning

Two economic reports helped investors shrug off Cisco's warning at midday Tuesday.

The Nasdaq rose 10.94 to 1,920.51, and the Dow Jones industrial average fell 0.78 to 10,157.78. The Inter@ctive Week @Net Index rose 2 to 177.58.

Economic news indicated that the U.S. economy is still chugging along. The closely watched Consumer Price Index, a measure of inflation, rose 0.1 percent in March, in line with analysts' expectations and below a 0.3 percent jump in February.

A report on U.S. industrial production also signaled a relatively strong economy. U.S. industrial output rose 0.4 percent in March, according to a Federal Reserve report, compared with a 0.4-percent dip in February. Analysts had expected output to fall by 0.2 percent.

Though the data indicated that the economy was relatively stable, it left investors unsure of how the Federal Reserve might respond with changes to interest rates.

"I think it's conceivable that inflation will be a migraine waiting to happen for the Fed, but if you combine a strong dollar, strong productivity growth and now a slowing economy, that probably implies modest inflation pressure for the foreseeable future," Tim O'Neill, chief economist at the Bank of Montreal in Toronto, told Reuters.

Shares of Cisco Systems (Nasdaq: CSCO) stumbled 25 cents to $16.95 after the company warned that it would miss third-quarter estimates. Although Cisco said it would eventually recover from a slowing economy, analysts debated whether it would ever regain its former glory.

Shares of software giant Computer Associates International (NYSE: CA) surged $3.30 to $32.95 as the software company bucked the trend of depressing news and told analysts it would report stronger-than-expected results for its fourth quarter.

After reporting mediocre first-quarter results, Sprint (NYSE: FON), off 84 cents to $22.57, said during a conference call Tuesday that its second-quarter and full-year results are likely to miss estimates. Its wireless division, Sprint PCS (NYSE: PCS), up 90 cents to $23.90, also reported results.

High-speed Internet provider Excite@Home (Nasdaq: ATHM), off 76 cents to $4.11, warned Tuesday that it anticipates lower-than-expected first-quarter and full-year revenues because of weak advertising sales.

Net giant Yahoo (Nasdaq: YHOO) on Tuesday appointed former Warner Brothers executive Terry Semel as its new chairman and chief executive officer, just a little over a month after Tim Koogle decided to step down from the top spot. Shares were off 21 cents to $17.41.

Amazon (Nasdaq: AMZN) was up 60 cents to $14.63, and AOL Time Warner (NYSE: AOL) rose $1.59 to $44.90.

Intel (Nasdaq: INTC), up 16 cents to $26.46, will report its results after Tuesday's closing bell. Oracle (Nasdaq: ORCL) rose 60 cents to $16.56, and Microsoft (Nasdaq: MSFT) was up 92 cents to $61.71.

ZDII staff and Reuters contributed to this roundup.