Strong earnings fuel tech stocks

The Nasdaq composite index rises in midday trading, boosted by upbeat earnings from Ariba and Applied Micro Circuits.

3 min read
The Nasdaq composite index rose in midday trading, boosted by upbeat earnings from Ariba and Applied Micro Circuits, while analyst upgrades lifted Agency.com and Exodus Communications.

After markets closed yesterday, Mountain View, Calif.-based Ariba reported a record $80.7 million in revenue for the third quarter, compared with $11.9 million for the year-ago period and $40 million for the previous quarter.

The maker of e-commerce software also posted a net loss of 5 cents per share, excluding nonoperating charges, vs. a loss of 11 cents per share last year. Ariba beat Wall Street's forecast of an 8 cent loss, the consensus estimate of 27 analysts surveyed by First Call.

Ariba shares rose $20.38, or nearly 20 percent, to $123.88 on volume of 14.8 million shares, more than twice the stock's average trading volume of 6.3 million.

The Nasdaq was up 55.94 to 4,155.53, and the Standard & Poor's 500 index climbed 1.32 to 1,494.24. The Dow Jones industrial average was flat at 10,784.

The CNET tech index rose 96.17 to 2,947.74. Winners trounced losers on the index, with 70 of the 97 stocks rising, 25 falling, and two remaining unchanged.

Of the 18 sectors tracked, computer data storage and Internet services companies posted the sharpest gains, climbing about 10 percent each. Computer-assisted design and manufacturing companies were the day's biggest losers so far, dropping 1 percent.

Shares of Applied Micro Circuits rose after the company shattered earnings expectations. Shares of the San Diego-based company rose $23.69, or about 19 percent, to $149.13.

The optical equipment chipmaker reported $74.2 million in revenue for the first quarter of fiscal 2001, compared to the $31.6 million reported in the same period last year.

The company posted earnings of 21 cents a share on a pro forma basis, compared with 6 cents for the year-ago quarter. Wall Street expected the company to earn 17 cents a share, the consensus estimate of 15 analysts surveyed by First Call.

Shares of Exodus Communications rose $8.06, or 19 percent, to $50 after the company received a boost from Robertson Stephens. Analysts Richard Juarez and Chetan Karkhanis raised the Web hosting company to "strong buy" from a "buy."

"Exodus continues to build upon its status as the category gorilla in the complex Web hosting space," the analysts wrote. "More importantly, we believe it has amassed a war chest of funds which give it the offensive capital needed to move aggressively into emerging new markets."

The analysts believe the company will post a loss of 11 cents a share for the second quarter and revenue of $170.5 million, compared with a loss of 7 cents and $42.5 million in revenue for the year-ago quarter. Twenty-five analysts surveyed by First Call expect the company to lose 12 cents a share for the quarter.

Agency.com rose $6.13, or nearly 39 percent, to $21.94 on a volume of 1.4 million shares, more than six times the stock's average of about 225,000.

Chase Hambrecht & Quist upgraded the Internet consulting company to "strong buy" from "buy" and added the stock to its "focus list."

Analyst Dirk Godsey wrote in a report that he believes the company will exceed his second-quarter estimates of 2 cents a share and $43.2 million in revenue when it reports earnings July 27.

Godsey noted that the company cultivates clients among Fortune 1000 companies so only 7 percent of its clients are venture-backed dot-com firms, which may experience financial trouble in the coming months. "This will prove to be an important advantage as dot-com spending begins to slow, and (consulting) firms seek to transition business away from dot-coms to more financially stable enterprises," he wrote.