STOCKS TO WATCH: Mentor Graphics, StorageNetworks and webMethods

Mentor Graphics will be on the move Thursday after it topped analysts’ estimates in its fourth quarter and raised estimates for the first quarter and fiscal 2001.

Company executives said it now expects first-quarter sales to rise 22 percent versus a year ago and that sales for the full year will be about $680 million.

The maker of systems and software used to design and test integrated circuits and printed circuit boards also said that it expects gross margin in the first quarter to be about 79 percent.

Operating expenses are forecast to rise by about 17 percent from year-ago first-quarter levels, while other income and expense is forecast to be about a $1 million loss in the first quarter. Amortization of goodwill included in operating expenses is forecast to be about $2 million in the quarter.

For the full year, gross margin should remain close to 80 percent, Mentor said in a statement. Operating expenses are forecast to rise 15 percent over 2000 levels after the first quarter.

Mentor shares closed off 88 cents to $28.25 before running up to $29.50 in after-hours trading.

StorageNetworks will be worth watching after it posted a smaller-than-expected loss in its fourth-quarter Wednesday, losing $36 million, or 36 cents a share, on sales of $21.2 million.

First Call Corp. consensus pegged the computer data services firm for a loss of 44 cents a share on sales of $19.2 million in the quarter.

Its shares closed off $1 to $27.94 ahead of the earnings report before moving up to $30 in after-hours trading.

The $21.2 million in sales marks a 578 percent jump from the year-ago quarter when it lost $14 million, or 59 cents a share, on sales of $3.1 million.

For the fiscal year, it lost $124.9 million, or $2.12 a share, on sales of $48.2 million compared to a loss of $23.9 million, or 98 cents a share, on sales of $6.3 million in fiscal 1999.

The systems integration software maker will be active Thursday after it topped analysts’ estimates in its third quarter and raised its outlook for earnings for the current quarter as well as revenue for the full year and next year.

Chief Financial Officer Mary Dridi said the company now expects fiscal fourth-quarter earnings, without extraordinary items, to be about 6 cents a share, higher than the 2 cents a share analysts had expected, according to First Call/Thomson Financial. She also said webMethods now expects revenue for the fourth quarter ending in March to be about $67 million, $11 million higher than the previous outlook.

The company also raised its outlook for fiscal 2002 revenues by $25 million to between $320 million to $330 million.

In the third quarter, it earned $2.7 million, or 5 cents a share, in the fiscal third quarter, topping the Street view by 4 cents a share.

The stock closed off $5.50 to $85.88 before jumping to $90 in after-hours trading.