THE DAY AHEAD: Blue skies ahead for 2Q tech earnings

The dreaded "confession season" where tech companies disclose their profit problems is just about over and things look pretty good for the latest batch of earnings on deck.

Through last week, S&P 500 companies had 76 earnings preannouncements with 36 profit warnings, 13 upside surprises with the rest on target, according to First Call Corp., an earnings tracking firm. For all of First Call's universe, there have been 369 preannouncements for the quarter with 203 of them being profit warnings, 59 being positive surprises and the rest being on target.

Tech earnings: Will they fuel another rally?

For perspective, there were 493 preannouncements in the second quarter last year and the majority of them were negative. This quarter about 55 percent of the preannouncements are negative.

"It looks like a business as usual quarter," said Chuck Hill, director of research for First Call. "At this stage there is nothing unusual."

Hill did note a few technology profit warnings from the likes of Compaq Computer Corp. (NYSE: CPQ) among others. But profit warnings from Compaq are becoming the norm.

In fact, few of the profit warnings in the tech sector were shockers. Advanced Micro Devices (NYSE: AMD) will report a second quarter loss, but after three profit warnings in the first quarter you get used to bad AMD news.

Other commodity tech businesses are feeling the pinch. Namely any company that makes components for PCs is in jeopardy. Micron Technology Inc. (NYSE: MU) had a weak quarter because of memory prices and most of the disk-drive related companies are taking a hit. Seagate (NYSE: SEG) issued a profit warning, but still looks like its in the best shape. Other disk-drive firms such as Western Digital (NYSE: WDC) will report hefty losses.

But we're used to profit warnings from those types of companies. Dell Computer Corp. (Nasdaq: DELL), Microsoft Corp. (Nasdaq: MSFT) and Intel Corp. (Nasdaq: INTC) appear to be doing fine. If no news is good news, the second quarter results could make techs euphoric this summer.

The wildcard in this equation is the Internet results. We know they'll hit estimates and even beat them. But will it be enough? We'll get the first indicator when Yahoo! Inc. (Nasdaq: YHOO) reports earnings on Wednesday.

Is the IPO market back?

When Ask Jeeves (Nasdaq: ASKJ) turns in the third-best opening day on record, more than are few are wondering if the good old days of 400 percent first day gains are back.

Not really. Internet IPOs are doing better because Net stocks are doing better. Concerns about interest rates have been lifted and some of the recent IPOs have been solid companies.

With that backdrop, it's time to revisit that old IPO standby -- supply and demand. Ask Jeeves floated 3 million shares, Commerce One (Nasdaq: CMRC) offered 3.3 million shares and E-Loan (Nasdaq: EELN) offered 3.5 million shares. All three IPOs had a small number of shares being offered compared to some of the other offerings that have launched recently. Combine the small float of shares with big-name underwriters and there will be some combustion.