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Nasdaq keeps its chin up despite Yahoo woes

The tech sector shrugs off a gloomy outlook from the portal giant to close higher for the third straight day.

    The tech sector shrugged off a gloomy outlook from Yahoo to post its third straight day of gains Thursday.

    The tech-heavy Nasdaq composite index closed up 116.39, or about 5 percent, at 2,640.57, and has climbed about 10 percent so far this week.

    "People just had a feeling that the market was oversold, and an interest rate cut would be positive for companies six to nine months down the road," said Ned Collins, head of trading at Daiwa Securities America. "Whether that actually happens is another matter."

    The Standard & Poor's 500 index gained 13.60 to 1,326.87, and the Dow Jones industrial average inched up 5.28 to 10,609.55.

    About 27 stocks rose for every 12 that declined on the Nasdaq, which generated a volume of 2.81 billion shares, its fourth highest on record. Trading on the New York Stock Exchange was heavy as 1.35 billion shares exchanged hands, and 16 stocks rose for every 13 that fell.

    Investors began to put money to work despite the realities of a less-than-perfect earnings season and a slowing economy.

    "The market is comfortable to trade within a range?and comfortable (with the fact) that some earnings are going to disappoint," said Louis Parks, senior managing director at Raymond James.

    Parks said he believes the market will trade within a range until unexpected earnings and interest rate news jar it loose either on the upside or downside.

    Investors used their acquired tolerance for bad news and chose to ignore dour earnings from tech bellwether Yahoo, which fell $4.63, or 15 percent, to $25.88. The stock also set a new 52-week low of $24.13, compared with a high of $250.06 over the same period.

    After the close of regular trading Wednesday, Yahoo posted a fourth-quarter profit of $80.2 million, or 13 cents a share, on sales of $310.8 million. The performance met the consensus profit estimate but missed most analysts' sales expectations.

    According to First Call, Wall Street expected Yahoo to earn 13 cents a share on sales of $315.1 million.

    In addition, company executives told investors to expect a profit of 33 cents to 43 cents a share on sales of $1.2 billion to $1.3 billion in fiscal 2001. That compares with previous revenue estimates of $1.42 billion and a profit forecast of 57 cents a share as surveyed by First Call. Wall Street reacted by slashing ratings and estimates on Yahoo.

    Other Internet advertising-dependent companies also fell. DoubleClick lost $1.19, or about 10 percent, to $11.25, and CNET Networks, publisher of News.com, declined $1.56, or 10 percent, to $13.56.

    All of the 18 sectors tracked by CNET Investor made gains. Server hardware makers led the pack, climbing about 10 percent, while providers of services to Internet companies advanced almost 8 percent.

    The server hardware sector gained with the help of Sun Microsystems, which rose $2.88, or nearly 10 percent, to $31.94, and Unisys, which advanced $2.19, or 14 percent, to $17.38.

    Other top tech companies added strength to the Nasdaq. Cisco Systems closed up $2.88, or nearly 8 percent, at $39.13; Microsoft gained $2.13 to $55; Dell Computer rose $1.50, or 7 percent, to $22.81; and Ericsson climbed $1.63, or 15 percent, to $12.25.

    The CNET tech index rose 86.61 to 2,246.96. Advancers beat out decliners, with 85 of the 97 stocks in the index rising, 11 falling and one remaining unchanged.

    Other companies posted some positive earnings news.

    Rational Software rose $6.06, or about 16 percent, to $45.19. The software maker reported that revenue for the fiscal third quarter increased to $215.5 million from $146.2 million a year earlier and posted a pro forma net income of 20 cents a share. Eight analysts surveyed by First Call expected the company to make 18 cents a share.

    Inrange Technologies rose $5.13, or 35 percent, to $19.75. The networking and switching-equipment maker said it expects fourth-quarter revenue to exceed analysts' expectations. The company gave no specific guidance, but Wall Street expects Inrange to earn 7 cents a share, the consensus estimate of three analysts surveyed by First Call.

    Motorola also posted respectable earnings, matching lowered expectations.

    Excluding charges, the maker of chips and mobile phones reported earnings of $335 million, or 15 cents a share, for the fourth quarter. In the same period last year, Motorola earned $564 million, or 25 cents a share. Fourth-quarter sales increased 11 percent to $10.1 billion for the quarter, compared with $9.1 billion last year.

    Shares of Motorola rose 94 cents, or 4 percent, to $22.13.

    The positive Motorola news rubbed off on the chip sector. The Philadelphia semiconductor index surged 37.97, or almost 6 percent, to 688.85, led by chipmaker Altera, which rose $2.94, or 9 percent, to $34.31.

    E*Trade said Thursday it will buy LoansDirect, a closely held online mortgage company, which will help diversify its business amid a trading slowdown. E*Trade expects the acquisition to immediately lift the company's earnings and revenue. Shares of E*Trade rose $2.09, or 21 percent, to $12.06.

    Shares of optical network equipment maker Nortel Networks climbed $2.13, or about 7 percent, to $34.06. The company announced plans to adjust its work force by eliminating jobs in the slow-growth segments of its business.