Tech Industry

Bright spots send markets higher

Techs rally in the afternoon on good news from Brocade Communications Systems and others as the broader markets digest mixed economic data.

Techs rallied Thursday afternoon on good news from Brocade Communications Systems and others as the broader markets digested mixed economic data.

The Dow Jones industrial average was up 117.56 to 9,829.42, and the Nasdaq composite index rose 45.29 to 1,933.26. CNET's technology indexes were generally higher.

Brocade gained $2.88, or 10 percent, to $31.70 after it posted a net loss in the fourth quarter but said results before charges beat expectations. The maker of switches for data-storage networks also forecast a steady or stronger showing in the current quarter.

Brocade's good news helped boost the storage sector; CNET's Storage index rose 2 percent.

Other companies, such as Palm and FreeMarkets, released fourth-quarter projections that pleased analysts.

The broader markets were occupied by problems at Enron. The energy giant, which runs an electronic exchange to sell electricity and other commodities, lost 85 percent Wednesday after credit rating agencies slashed its debt status to "junk" and Dynegy pulled out of its planned $9 billion merger with the company. On Thursday, analysts were pondering the consequences of a potential Enron collapse as shares continued to fall.

On the economic front, first-time unemployment claims rose by 54,000 last week, according to a report from the Labor Department. The number of workers filing initial jobless claims for the week ended Nov. 24 hit 488,000, much more than the 448,000 claims economists had expected. The number of continuing claims for jobless benefits also indicated that the employment situation is worsening: Continued claims rose by 301,000 to 4.02 million for the week ended Nov. 17, the biggest one-week jump in 27 years.

On the bright side, durable goods orders for October showed surprising strength. Orders for costly U.S. durable goods rose 12.8 percent to $184.8 billion, the largest gain since the Commerce Department started keeping records in March 1992. The gains were led by huge increases in orders for aircraft and defense capital goods, the government said.

A report on new home sales also came in better than expected. The government said sales of new U.S. homes rose 0.2 percent to an annual rate of 880,000 units last month, up from 878,000 in September.

The sales figure was much stronger than Wall Street had estimated; economists had expected new home sales would fall, dipping to an annual rate of 853,000 units in October.

Among notable tech issues, Palm rose 25 cents, or 7 percent, to $3.66 after it said it would lay off 250 workers, or 18 percent of its employees, in its third round of job cuts this year. The handheld-computer maker also pleased investors by announcing it would meet analysts' forecasts for the second quarter.

Sun Microsystems made strong gains, up 65 cents, or 5 percent, to $13.81, sending CNET's Server Hardware index up about 5 percent.

FreeMarkets was active after the company said fourth-quarter sales and profit, excluding some costs, would be higher than expected. Shares rose $4.59, or 33 percent, to $18.18.

Extreme Networks was off $1.20, or 7 percent, to $16.50 after the broadband network equipment maker said it plans to sell up to $175 million of five-year subordinated notes convertible into company stock.

Echelon plunged $2.48, or 10 percent, to $14.92 after receiving a rare "sell" rating from Prudential. Analyst Nicholas Heymann said the company, which makes software and hardware used for manufacturing, has expensive shares and no "clear path for accelerated EPS (earnings per share) growth for 2003."

Among other actively traded shares, Cisco rose $1.01, or 5 percent, to $19.89. Intel rose 56 cents to $32.32, Oracle rose 7 cents to $14.19, and Microsoft rose $2.04 to $64.84.

AOL Time Warner lost 12 cents to $35.38, Yahoo gained 49 cents to $16.70, and Amazon.com was off 44 cents to $16.70.

Staff and Reuters contributed to this report.