THE WEEK AHEAD: Investors looking for leadership

3 min read

Solid economic news and strong earnings reports from key technology firms should give investors a little courage heading into what should be a relatively quiet week.

For the week, the Dow Jones industrial average picked up 364 points to 10,590.62 while the Nasdaq composite shed 265 points to finish at 3,277.95.

On Friday, the Commerce Department reported the Gross Domestic Product in the third quarter was up 2.7 percent, well short of forecast for a 3.4 percent rise.

In the same report, consumer spending gained 4.5 percent following a 3.1 percent rise in the previous quarter. But the GDP price index was up just 2.2 percent for the quarter soothing jitters about inflation.

"It really confirms that we are in a slowdown," said John Davidson, chief investment officer at Orbitex Management. "It reduces the likelihood that the Fed will raise rates and that's positive."

Amazon.com (Nasdaq: AMZN) made a modest recovery this week after it posted a third-quarter loss of $68 million, or 25 cents a share, on sales of $638 million.

Analysts were expecting a loss of 33 cents a share in the quarter.

The $638 million in sales marked a 79 percent jump from the $355.8 million it reported in the year-ago quarter. Most analysts were expecting sales just shy of $600 million in the quarter.

The company said in its post-earnings conference call that its operating costs for the year 2000 will be less than 5 percent of sales.

JDS Uniphase garnered a lot of attention this week after delivering solid earnings in its first quarter and boosting its outlook for fiscal 2001.

The maker of parts for optical networks reported fiscal quarter earnings of $177 million, or 18 cents a share, on sales of $786 million. First Call Corp. consensus expected it to earn 16 cents per share.

Company officials now expect sales to jump 115 to 120 percent from the $1.77 billion in combined sales generated by JDS Uniphase and the recently acquired E-Tek in fiscal 2000. JDS Uniphase previously expected sales growth of 90 percent. Full year earnings should be about 80 cents, compared to earlier expectations of 70 cents.

Compaq (NYSE: CPQ) also surprised the Street when it posted a profit of $550 million, or 31 cents a share, on sales of $11.2 billion.

Strong server sales helped the company beat even the most optimistic top-line estimates by more than $400 million.

Looking ahead to next week, a handful of smaller technology firms will report quarterly results.

  • EarthLink (Nasdaq: ELNK) will report its third-quarter earnings report with analysts projecting a loss of 37 cents a share.

    Last quarter, the Internet service provider beat the Street when it lost $35.2 million, or 29 cents a share, on sales of $230.9 million.

    Its shares hit a 52-week high of $31.88 in December after falling to a low of $5.88 in last October.

  • Accord Networks (Nasdaq: ACCD) is expected to post a third-quarter profit of 4 cents a share.

    Accord got off to a shaky start when its initial public offering went bust back in June.

  • HyperFeed Technologies (Nasdaq: HYPR) also will report its third-quarter results next week.

    There is no First Call Corp. consensus estimate this quarter.